Chaoda Modern Agriculture (Holdings) has raised HK$700 million through a top-up placement to fund the expansion of three crop production bases on the mainland, sources said.
The vegetable grower and processor's controlling shareholder, Kailey Investment, sold 280 million existing shares at HK$2.50 each, a 5.66 per cent discount to Wednesday's closing share price of $2.65.
It will then subscribe to the same amount of new shares at the same price. The issue represents 13.7 per cent of the existing share capital, and 12.4 per cent of the enlarged share capital.
Sources said the placement was about three times oversubscribed. Strong demand led the company to increase the offering to 280 million shares from 200 million.
This is despite some brokerage analysts dropping coverage of the firm due to lack of confidence in the company's corporate governance.
Investor confidence was battered after the company's former auditor PricewaterhouseCoopers refused to endorse its 2002 full-year earnings due to accounting discrepancies at two subsidiaries.
However, that confidence has returned after institutional investor Value Partners bought a stake last year. In the past three months, the firm's stock has risen 80 per cent.
