Yuexiu Property to Raise $496 Million in Rights Offer

Yuexiu Property Co., a real-estate developer controlled by the government of the southern Chinese city of Guangzhou, said it will raise HK$3.85 billion ($496 million) in a rights offer to fund future land purchases.

The company will allow investors to buy 33 new shares at HK$1.25 each for every 100 they now hold, for a total of 3.08 billion new shares, according to a Hong Kong stock exchange filing yesterday. The new stock is priced at a 25 percent discount its last closing price.

The fundraising comes after new home prices fell in July in almost all cities China’s government tracks and developers are missing sales targets. Declines in the real-estate market will create opportunities for the company in the second half of this year or early next year, Chairman Zhang Zhaoxing said in a separate e-mailed press release yesterday.

“After over a decade of rapid development, the ongoing consolidation of mainland China’s property market is necessary to promote healthy and rational development,” Zhang said. “This presents an immense opportunity for truly capable and financially sound property developers such as us.”

The stock gained 0.6 percent to close at HK$1.67 on Sept. 2, the last day of trading before the shares were suspended. Yuexiu said it will resume trading in Hong Kong today.

Yuexiu Property will use cash raised in the share sale to strengthen its capital base and to fund future expansion, including the expansion of land reserves, and as working capital, according to yesterday’s statement.

In 2010, the company sold 2.14 billion shares in a rights offer of three new shares HK$1.61 each for every 10 held, according to filings at the time.

Last week, Country Garden Holdings Co., controlled by China’s richest woman, Yang Huiyan, fell the most in four months in Hong Kong trading after announcing a plan to sell new shares at a 31 percent discount to fund debt payment.

Before it's here, it's on the Bloomberg Terminal.
LEARN MORE