New World Development Company Limited ("the Company") (Hong Kong stock code: 0017) today announced that it is seeking to raise approximately HK$5.3 billion by way of a Rights Issue (the "Issue").
The Company proposes to offer shareholders two new shares for every five shares held at a price of HK$5.40 per share. This represents an approximately 38% discount to yesterday's closing price of HK$8.70.
The Rights Issue will strengthen the capital base and financial position of the Company, and thereby facilitate its plans to further develop its existing urban and agricultural land bank and pay any associated Government land conversion premiums. The Directors intend to use approximately HK$3.3 billion of the net proceeds from the Rights Issue to repay the Convertible Bonds, which will be due on 9 June 2004, and the balance will be used for general working capital purposes.
Commenting on the announcement, Dr. Henry Cheng, Managing Director of New World Development Company Limited, said, "The Rights Issue will allow us to reduce our debt and accelerate the development of our land bank. Majority Shareholders have committed to take up their full entitlement under the terms offered to shareholders. The Company believes that the discount offered makes the Issue attractive, given rising confidence in the Hong Kong property market."
Approval for the Issue will be subject to approval at an EGM. The Major Shareholders of the Company and their Subsidiaries, who in aggregate make up 35.26% of the existing share capital of the company, have undertaken to take up their Rights in full.