Sample Group subscribes to new shares in Nanjing Sample Technology

Nanjing Sample Technology, an intelligent traffic solutions provider, said its major shareholder Sample Group has agreed to subscribe in cash to its new domestic shares and the proceeds will be used for partial repayment of debt and also as general working capital.

The company will raise net proceeds of 413.7 million yuan (HK$521.2 million) from the launch of 92,723,400 new domestic shares at the subscription price of 4.50 yuan (HK$5.67), according to a filing of the company to the Hong Kong stock exchange after the morning session ended.

Sample said that it had 411.25 million yuan in both short term and long term bank borrowings by the end of last year, and it expects to repay short term borrowing of 380 million yuan within 12 months from July 1, this year.

The going average interest rate on its short term and long term bank borrowings last year ranged from 6.0 per cent to 6.7 per cent, according to the filing.

It said further bank borrowings in the magnitude of the domestic shares subscription will not only “significantly increase the financial obligation but the related interest payment will also erode the operating result and the operating cash flow”.

Sample shares rose 3 per cent in the morning session on Wednesday to HK$6.59, compared with an increase of 1.55 per cent of the benchmark Hang Seng Index in the early session.