Gome Electrical Appliances Holdings Ltd, China's second-biggest electronics retailer by market value, sold 2.05 billion yuan of convertible bonds to help refinance debt and boost capital.
The five-year, 3-percent notes were priced to yield 4.14 percent and can be converted into shares at HK$2.838, a 29-percent premium to Tuesday's closing price, according to a term sheet e-mailed by sale manager JPMorgan Chase & Co yesterday.
Gome has 4.6 billion yuan of zero-coupon convertible bonds due May 2014 that bondholders can ask the company to redeem in May next year, according to data compiled by Bloomberg. The company raised 1.59 billion yuan in June from a sale of 5-percent convertible notes.
"This may give them spare cash on hand which they can use and take the chance to expand next year," Ashley Cheung, an analyst at BOCI Research Ltd in Hong Kong, said yesterday. "I think they don't even need it, so now they're financially in an even better position."
The retailer had 779 stores as of June 30, 9 percent less than a year ago. The network has 1,212 outlets including those owned by the closely held Gome Group, controlled by the family of billionaire founder Huang Guangyu.
Gome fell 3.6 percent, the most in a week, to close at HK$2.12 in Hong Kong trading. The company's market value has more than doubled since it ended a seven-month trading halt on June 23, compared with a 20 percent gain for the Hang Seng Index.
(Agencies via China Daily September 24, 2009)
