China developer Sunac and services unit plunge on share placement, stake sale (updated)

Sunac Services Holdings

15/11/2021 02:23

(Adds details, analyst comment)
    HONG KONG, Nov 15 (Reuters) - Shares of Sunac China
 1918.HK  and its services unit  1516.HK  dropped on Monday
after the Chinese developer raised a total of HK$7.4 billion
($949.70 million) by issuing new shares and selling a stake in
Sunac Services.
    Sunac dropped as much as 9.2% to HK$15.48 in early trading,
after issuing 335 million shares, or 6.7% of total shares
including the fresh placement, at HK$15.18 apiece, raising
HK$5.1 billion. 
    Sunac also sold a 5.1% stake in Sunac Services at HK$14.75
per share to raise HK$2.33 billion. The share price of Sunac
Services plunged as much as 13.8% to HK$14.28.
    The company said in a filing on Sunday it plans to use half
of the proceeds to repay loans.
    Sunac chairman Sun Hongbin has provided an interest-free
loan of $450 million to the company to show his long-term
confidence and commitment, according to the filing.
    Liquidity in the China property sector has become very tight
in the past few months after unprecedented waves of policy
tightening and investor worries about wider contagion from China
Evergrande Group  3333.HK , the world's most indebted developer,
which is teetering on the brink of collapse. 
    Brokerage Jefferies said in a note it was "a right move" for
Sunac to gather sufficient funding in order to solve its
short-term tight liquidity, which was driven by weak sales and
refinancing difficulty.
    It expected the developer's net gearing ratio to decrease
slightly lower by 2 basis points to 85% after the share
placement and sale of the stake in its services unit.    
    The Hang Seng Index  .HSI  was flat. 
    
($1 = 7.7919 Hong Kong dollars)

 (Reporting by Clare Jim; Editing by Simon Cameron-Moore)
 ((clare.jim@thomsonreuters.com; +852 2912 6653; Reuters
Messaging: clare.jim.thomsonreuters.com@reuters.net))