New World Development chief says rights issue not meant to dilute minority shareholders
New World Development proposes a deeply discounted 1-for-11 rights issue to raise about HK$24.9 billion. CEO Huang Shaomei says the plan, fully underwritten by major shareholder Chow Tai Fook Enterprises and banks, aims to ease cash flow and avoid distressed asset sales, not to dilute minority share
New World Development has announced a fully underwritten rights issue on a 1-for-11 basis, aiming to raise about HK$24.9 billion (US$3.2 billion). The subscription price is set at HK$0.90 per share, representing an approximately 81.5 per cent discount to the closing price of HK$4.87 before trading was suspended, and about a 26.9 per cent discount to the theoretical ex-rights price of HK$1.23. The underwriting syndicate comprises controlling shareholder Chow Tai Fook Enterprises, HSBC and DBS Bank.
Executive Director and Chief Executive Officer Huang Shaomei told an online media briefing that the proposed capital restructuring plan is a comprehensive package of mutually reinforcing measures. She said the goal is to reshape the capital structure, improve liquidity and extend debt maturities, providing the group with clear development headroom and financial support.
Huang said the new funds from the rights issue, combined with extended debt repayment schedules from banks, should effectively ease cash-flow pressure. This would buy the company more time and space to reduce debt in an orderly manner and gradually improve its financial position.
She stressed that the arrangement is designed to raise sufficient funds while offering shareholders flexibility. The major shareholder's underwriting commitment, she said, is by no means intended to dilute or exploit minority shareholders. Instead, it aims to protect the company's quality assets and avoid having to sell them at low prices, which would harm shareholders' interests.
Huang added that Chow Tai Fook Enterprises' pledge to fully subscribe to its entitlement and provide underwriting support fully demonstrates the confidence of the controlling shareholder, HSBC and DBS in New World's long-term prospects. She said this shows their determination to back the company's capital restructuring through concrete action.