Shares in Gome Electrical Appliances Holding more than doubled at one point yesterday when trading resumed from a seven-month suspension amid a probe of its founder, as investors cheered the company's HK$3.24 billion fund-raising plan.
The stock closed at HK$1.89, up 68.75 per cent from the last closing price of HK$1.12, defying a 2.89 per cent slump in the benchmark Hang Seng Index.
'The share performance shows that our hard work in the past seven months has paid off,' chairman Chen Xiao said yesterday.
Brokerages revised their targets on the stock upwards, convinced that the worst was over for the mainland's biggest electrical appliance retailer.
The new capital would shore up Gome's balance sheet, and the planned convertible bond refinancing and a foreign strategic investor could improve corporate governance, they said.
Beijing-based Gome announced on Monday it would raise at least HK$3.24 billion by issuing convertible bonds to United States private equity fund Bain Capital and offering new shares to existing investors.
Gome will issue to Bain US$233 million worth of seven-year convertible bonds with an annual coupon of 5 per cent. It will also issue at least 2.296 billion new shares at 67.2 HK cents each in an open offer to shareholders on the basis of 18 new shares for every 100 shares held.
