Red-chip Shum Yip Investment says it has issued US$200 million worth of guaranteed convertible bonds to finance its property and transport business and to make new investments. The bonds, due in 2002, bear interest at 1.2 per cent per year and carry the right to convert to Shum Yip shares at a conversion price of HK$10.375 per share, a premium of 18.6 per cent on Friday's closing price. As part of the deal, joint lead manager Peregrine Capital has an option to subscribe for up to another US$30 million worh of bonds, which would raise the bond issue to $230 million.
Shum Yip's directors said 40 per cent of the net proceeds would be used for investments in new business areas in Shenzhen, Hong Kong, or other mainland cities. A total of 30 per cent would be used for the company's property business, 10 per cent would be put towards the transport business, and 20 per cent would be used for corporate purposes. Upon full conversion of the bonds, the company will issue 171.73 million new shares, representing 16.6 per cent of the existing share capital, or 14.2 per cent of the enlarged share capital.
