UpdateChina’s Huaneng Power unveils HK$5.7b capital raising, shares tumble
Huaneng Power International to sell HK$5.7 billion worth of new shares at 9.5 per cent discount
Shares of Huaneng Power International were hammered yesterday, following an announcement by the company that it plans to sell HK$5.7 billion worth of new shares to repay loans and fund business development, shoring up its capital base ahead of a cut in producers’ power prices expected soon.
Huaneng Power’s Hong Kong shares closed 7.7 per cent lower at HK$7.47, the lowest since April last year.
The listed unit of the mainland’s largest power generator China Huaneng Group has appointed Citic CLSA Securities as the sole agent to sell 780 million new shares - or 5.13 per cent of its total number of issued shares - at HK$7.32 each, HPI said in a statement to the Hong Kong Exchanges & Clearing on Friday ahead of the start of trading.
It represented a discount of 9.5 per cent to Thursday’s closing price of HK$8.09.
The company last sold new shares just over a year ago, when it raised HK$3.1 billion by selling 365 million shares at HK$8.6 each.
“The net proceeds from the placing are intended to be used for repaying bank loans and supplementing working capital,” the company said in the statement. “The placing will further optimise the capital structure of the company.”
Citi head of Asia utilities research Pierre Lau wrote in a note on Friday, the shares’ placement price looks low, probably dragged by concerns that Beijing may soon announce a 5 to 7 per cent cut in regulated coal-fired power prices chargeable by producers to distributors following a sharp drop in coal prices.