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Esprit Surges After Rights Offer Is Oversubscribed

Nov. 26 (Bloomberg) -- Esprit Holdings Ltd. climbed in Hong Kong trading after the apparel retailer said its rights offer of shares was about seven times oversubscribed.

The clothier jumped as much as 10 percent before closing 2.8 percent higher at HK$12.58. The benchmark Hang Seng Index dropped 0.2 percent.

Esprit in October said it planned to raise as much as HK$5.2 billion ($671 million) in a rights offer to fund efforts to revive its brand after posting a slump in first quarter sales. The Hong Kong-based company received applications that represented 7.7 times the rights shares available for subscription, according to a Nov. 23 statement.

“The oversubscription is definitely positive for the stock,” said Steven Leung, a Hong Kong-based institutional sales director at UOB Kay Hian Ltd.

Esprit last week confirmed that former chairman Michael Ying has increased his stake to 10.34 percent from 8.99 percent.

Ying’s move may give investors “some hopes that he would take more control of the company and direct the company to the right track,” UOB’s Leung said. Esprit has missed estimates in the last five years as competitors such as Inditex SA’s Zara have drawn customers away.

To contact the reporter on this story: Vinicy Chan in Hong Kong at vchan91@bloomberg.net

To contact the editor responsible for this story: Stephanie Wong at swong139@bloomberg.net

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