Tack Hsin seeks $80m to fund China restaurants

Kenneth Ko

RESTAURANT operator Tack Hsin Holdings is aiming to raise about $80 million for expansion in China through an issue of new shares.

The offering, expected after the Lunar New Year, will include the issue of one free warrant for every five shares.

The Standard Chartered Asia-sponsored issue will carry a price-earnings multiple of about eight.

About half of the funds raised would be used to finance establishment of restaurants in China, with the remainder going towards debt reduction and as working capital.

Mr Ivan Au Yee-ming, executive vice-chairman of Tack Hsin, said the company was committed to leasing 380,000 sq ft of space at the Taiwan Garden Building in Shenzhen to operate its first restaurant in China.

He said the Shenzhen outlet, involving an investment of more than $10 million, was due to open in the middle of the year.

Group chairman Chan Shu-kit said the outlet would employ between 250 and 280 staff.

He added that Tack Hsin was also seeking restaurant locations in Shanghai, Beijing and Macau.

He said his company would give priority to expansion in China in view of the mainland's rising consumer spending and lower operating costs.

He expected China operations to return profits of 13 to 15 per cent, against an average of six to nine per cent for Hongkong operations.

For the last fiscal year to March 31, Tack Hsin made a profit of $27 million on a turnover of $332 million, compared with earnings of $16 million and sales of $242 million in the previous year.

Turnover for the first half of this year amounted to $165 million, and full-year sales were expected to reach $400 million.