The highway infrastructure spin-off will have a net borrowings-to-equity ratio of between 142 and 192pc
Hopewell Highway Infrastructure (HHI), to be spun off by Hopewell Holdings on the main board early next month, will have net debt that is up to 92 per cent higher than shareholders' equity after the listing, despite raising up to $3.64 billion.
HHI was estimated to have long-term borrowings of $11 billion at June 30 this year. Shareholder equity after the listing will be up to $5.06 billion, taking the fund-raising into account.
This will leave the company with a high net borrowings-to-equity ratio of between 142 and 192 per cent after the listing, according to data provided in underwriter research reports released yesterday.
The company is aggressively pushing ahead with marketing of its offer, which has yet to be approved by shareholders, who will vote on July 16. An international roadshow will pre-empt this, kicking off on July 14. Pre-marketing - presentations to fund managers and a prelude to order-book building - began last week.
The projected debt ratio - to be determined according to the final fund-raising size of HHI's share offer - is much higher than those of its peers already listed on the main board. The corresponding debt ratios of the six listed mainland toll-road operators range from zero to 37.7 per cent, according to their annual reports. They include Jiangsu Expressway, Zhejiang Expressway, Sichuan Expressway, Road King Infrastructure, Anhui Expressway and Shenzhen Expressway.
HHI was proposing to sell 720 million new shares to investors to raise net proceeds of $2.77 billion to $3.63 billion, which would see Hopewell Holdings' stake reduced from 100 per cent to 75 per cent, sources close to the deal said.
