Tonic Industries Holdings, a maker of audio equipment, which is to raise $72 million by selling 72 million new shares at $1 each, is to co-operate with Egana Holdings to develop new products.
The move came after the watch distributor acquired a 25 per cent stake in Tonic in May for $36 million.
Its interest in Tonic will be diluted to 18.75 per cent after the listing candidate's capital is enlarged by the new share issue.
Egana executive director Peter Lee Ka-yue, who is in the same post at Tonic, said Egana would make use of its strong distribution capability and Tonic's technical know-how to develop radio-controlled watches.
About $4 million of the share-sale proceeds would be devoted to the research in this product.
The remainder would be used to acquire new production facilities and as general working capital.