Shui On Land is to raise up to HK$4.13 billion through a rights issue to finance its involvement in two large-scale urban renewal projects in Shanghai and future land acquisition.
The news came as the company revealed its full-year underlying profits had plunged 87 per cent year on year to 201 million yuan (HK$248 million) in 2012.
The company announced a rights issue of one new share for every three shares held. The rights shares will be priced at a steep discount of HK$1.84 each, or almost 45 per cent below Wednesday's closing price of HK$3.34 a share.
Shui On Land said it would raise a minimum of HK$3.67 billion and a maximum of HK$4.13 billion through the offering, and use the proceeds to assist in the relocation process for the Shanghai Taipingqiao and Rui Hong Xin Cheng projects, acquire assets or businesses which were relevant to its principal business and repay existing debts.
The firm's gearing ratio stood at 70 per cent last year, up from 65 per cent in 2011.
The cash call also came after the deferral of the US$1.5 billion spin-off of its commercial property unit, China Xintiandi, because of souring market sentiment.
The spin-off plan was announced in May last year.
Chairman Vincent Lo Hong-sui and chief executive Freddy Lee Chun-kong apologised yesterday for the drop in profits for 2012, saying property sales had halved to 3.51 billion yuan and interest expenses more than doubled to 513 million yuan last year.
The firm attributed the plunge in profit to the mainland government's string of tough measures to curb property demand.
For the first three months of 2013, Lo said, the company pulled in five billion yuan in contract sales, securing more than half of this year's target sales of nine billion yuan.
Lo said negotiations had been held with several big companies interested in investing in China Xintiandi.