China property developer Yuzhou to raise $14.4 mln via rights issue (updated)

Yuzhou group Co

01/11/2024 05:54

(Releads with rights issue, adds other details, share price in
paragraphs 2-3)
    By Clare Jim and Sneha  Kumar
       Nov 1 (Reuters) - Shanghai-based property developer
Yuzhou Group  1628.HK  said on Friday it plans to raise HK$112.2
million ($14.43 million) via a rights issue to settle the fees
from its proposed offshore debt restructuring. 
    The company is also proposing to consolidate every ten
previously issued shares into one share, and change the board
lot size for trading from 1,000 existing shares to 5,000
consolidated shares, it said in a filing to the Hong Kong Stock
Exchange.
    Shares of Yuzhou tumbled nearly 19% to HK$0.108 in early
afternoon trading.     
    Yuzhou, one of the many property firms hurt by a slowdown in
China's real estate market, is close to completing restructuring
its $6.7 billion of offshore debt. 
    The rights issue will be on the basis of 49 rights shares
for every 100 existing shares at the subscription price of
HK$0.035 per rights share, it said, representing a 73.7%
discount to the Thursday closing price.
        Yuzhou plans to issue up to 3.2 billion rights shares
with Chairman and CEO Kwok Ying Lan and her husband Lam Lung On,
a controlling shareholder, undertaking a total of 1.89 billion
of the rights, worth around $8 million, the filing said. 
  
        In a separate filing to the exchange, Yuzhou also said
it will issue 5.65 billion of existing shares to be exchanged
with some creditors for their debt at HK$2.127 apiece as part of
the restructuring.
    The company said it would be appropriate to issue the shares
so that the company could reduce the amount of outstanding
indebtedness while allowing holders of the new shares to
participate in the future returns when its business operations
improve.
    Yuzhou offered its restructuring plan in August 2023, a year
after it defaulted on dollar bond payments.        
    China is presently trying to support the housing market by
rolling out multiple incentives such as the recent fund boosts
for housing projects.  

($1 = 7.7743 Hong Kong dollars)

 (Reporting by Sneha Kumar in Bengaluru and Clare Jim in Hong
Kong; Additional reporting by Donny Kwok; Editing by Alan Barona
and Christian Schmollinger)
 ((Sneha.Kumar@thomsonreuters.com))