Chinese household appliance maker Midea seeks US$2.2 billion from convertible bond sale
Midea looks to tap into the debt market to fund its overseas expansion and boost offshore liquidity amid rising sentiment on the stock.
The Guangdong province-based company would issue the bonds in two tranches of HK$8.62 billion each, with the first maturing in May 2027 and the second due in May 2033, Midea said in a statement to the Hong Kong stock exchange on Thursday. The bonds carry zero coupon rates and do not bear interest, it said.
“The board considers that the issue of the bonds represents an opportunity to potentially enlarge and diversify the shareholder base, to improve the liquidity position, to reduce the financing costs and to raise further working capital,” the company said in the statement.
A flurry of Chinese companies are offering convertible bonds, which bear low borrowing costs, as sentiment on the stocks improves with the easing of tensions in the Middle East.
Convertible bonds are securities that can be converted into shares at a predetermined price, typically set at a premium to the stock price. When share prices are high, issuers can set a higher conversion price, and investors gain more confidence that the stock will rise enough to make conversion worthwhile.
Midea shares slid 2.7 per cent to HK$85.30 on Thursday in Hong Kong.