Wharf seeks HK$10b from rights offering
Shoppers at Times Square, a mall owned by Wharf Ltd. The company said its rights issue would be in the best interest of shareholders. Nelson Ching / Bloomberg |
Firm to use proceeds to help fund mainland property developments
Property-to-ports operator Wharf Holdings Ltd said it is planning to raise HK$10.05 billion through a rights issue, in order to help fund its ambitious mainland property development plans.
It will sell 275.39 million shares at HK$36.50 each via the rights offer, in which it will issue one share for every existing 10 shares, the conglomerate told the Hong Kong Stock Exchange late Thursday.
Shares of Wharf closed at HK$53.1 in Hong Kong trading Friday, up 0.1 percent or HK$0.05 from a day earlier. The issue price represents a 31 percent discount to Wharf’s closing price of HK$53.05 on Thursday.
Wharf, which owns two of the city’s most popular shopping malls – Harbour City and Times Square – said in the filing that “it would be in the best interest of Wharf and the shareholders as a whole to raise long-term equity capital through a rights issue to finance its future expansion plan and to strengthen its capital base”.
Proceeds will be used to finance additional property and related investments on the mainland, which is in line with Wharf’s overall long-term business strategy, according to the group.
The stock has tumbled 11.2 percent or HK$6.7 so far this year, compared with a 0.9 percent loss on the city’s benchmark Hang Seng Index.
“Wharf has been very active in developing mainland projects in the past few months,” said Linus Yip, strategist with First Shanghai Securities. “Even though recent market sentiment is rather gloomy, it is still proceeding with the rights issue because it needs the money.”
On Jan 31, the company announced that it had won the bids for two pieces of land in Changsha, Hunan province, and Hangzhou, Zhejiang province, for a total of 6.28 billion yuan.
The deal followed its purchase of land in Suzhou, Jiangsu province, earlier in the same month. Wharf bought two plots of land in the city for 2.91 billion yuan through a land auction.
Wharf’s land bank reserves on the mainland now totals more than 125 million square feet following these deals, the group said.
As mainland lenders have stepped up the interest rate hikes and the trend also beginning to felt in developed economies, Yip said it was possibly part of Wharf’s strategy to replenish its capital before the loan situation gets worse.
Wharf also operates the city’s largest cable television network as well as container terminals, and office-retail complexes in both the city and the mainland.
In November, Sino Land Co, the Hong Kong-based development firm controlled by billionaire Robert Ng, said it would raise HK$5.14 billion in a top-up placement to enhance working capital.
The city’s third-biggest developer by market value, Hang Lung Properties Ltd, also placed almost 300 million shares in the same month, raising about HK$10.9 billion.
“Hong Kong developers are not necessarily following suit. These share placements are more related to their individual development plans on the mainland since land acquisitions have become rather pricey there,” said Yip.
According to its interim report released in August, Wharf’s profit excluding property revaluations rose 27.7 percent to HK$4.2 billion for the six months ended June 30, up from HK$3.29 billion a year earlier.
Wheelock & Co, which owns a 50.02 percent stake in Wharf, will take up its allotment of new shares and will underwrite the offer this time, said the company.
China Daily
http://www.chinadaily.com.cn/hkedition/2011-02/12/content_11989544.htm