CNC to raise HK$160 million for mainland LED screen venture
CNC Holdings (CNC), a Hong Kong-listed unit of Xinhua, is trying to raise up to HK$160 million by issuing new shares to fund its outdoor advertising project.
"We've been talking to a number of investment banks and funds, but the progress is very slow because of the weak market sentiment," said Eric Chia Thien-loong, executive director of CNC.
Chia said the plan is feasible if there is financial support. CNC was listed in Hong Kong in 2010 and has investments in waterworks, engineering services and road works, as well as television broadcasting. It now wants to diversify into outdoor advertising.
"We currently have a cash flow of HK$12 million … and that will be enough to build three or four pieces of light-emitting diode [LED] screens," Chia said.
He added that CNC plans to rent out the displays at below market rates to quickly recoup the capital to build more screens.
"But, this is not as efficient as having enough money on hand to build more screens at one time. So, we are also thinking about issuing new shares to raise between HK$100 million to HK$160 million," Chia said.
Average construction cost of each LED screen is 15,000 yuan (HK$18,669) per square metre, which translates into 1.2 million to three million yuan for LED screens of 80 square metres to 200 square metres, according to Chia.
After the advertising agent rents it, CNC will provide news content while the rest of the time can be sold to advertisers in slots.
The price of CNC shares has halved since last December, to 71 HK cents each at yesterday's close.
Last month, the company reported a net loss of HK$48.6 million for the six months ended September, compared with a loss of HK$2.5 million in the period last year.
CNC will waive the payment of convertible bonds interest incurred over the past 12 months of HK$19.9 million "to support the development of the business", the company said in a filing to the stock exchange yesterday.
