Wing On Travel spooked investors yesterday after announcing plans to tap the market for more than HK$800 million with its fifth major fund-raising plan in the past 2 1/2 years.
The travel operator tumbled the most in seven months, sliding 19.1 per cent to 3.4 HK cents. More than HK$15.8 million worth of its shares changed hands, up fivefold from the previous session, as investors piled into the sell-off. It was the third-worst performing stock in Hong Kong.
Wing On has launched three share placements, two rights issues and a convertible bond placement since June 2007, according to stock exchange records. It was targeting a combined sum of as much as HK$2.7 billion.
The current round of fund-raising includes a rights issue that could raise as much as HK$539 million and a convertible bond placement for up to HK$289 million. Wing On said it planned to consolidate every 20 issued ordinary shares into one to facilitate the process.
'It's a very bad situation,' said Ricky Tam Siu-hing, a director at Champlus Asset Management. 'Suppose next time it cannot raise more funds; it may indicate that the company cannot survive.'
Wing On was seeking capital to repay loans and cover building costs for hotel projects in Hong Kong and on the mainland. It announced plans to raise as much as HK$1.1 billion this summer, citing similar reasons, but only generated HK$61 million.
