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TCL Corp, China's second-biggest TV and cellphone maker, will launch an initial public offering this week to raise 2.5 billion yuan (US$302 million) to expand its core business, the company says.
In a landmark move, TCL Corp will also allow shareholders of its subsidiary TCL Communications Equipment Co Ltd to swap their stock for the IPO shares, TCL Corp said Monday in a share issue prospectus.
The prospectus was published on the Shenzhen stock exchange's Web site, www.cninfo.com.cn.
Subscriptions to TCL Corp's yuan-denominated A shares -- open to Chinese and select overseas investors -- will begin on Wednesday for individuals and institutional investors holding trading accounts with the Shenzhen bourse, where the IPO will be made, the company said.
A total of 590 million IPO shares, accounting for 22.81 percent of the company's expanded share capital of 2.586 billion yuan, would be issued at a price of 4.26 yuan per share, or 15.97 times the company's 2002 earnings, it said.
TCL Comms is to be delisted, while shareholders would be given the right to swap existing shares for those in the debutante at 21.15 yuan each.
"TCL will spend around one billion yuan to acquire one or two domestic or foreign companies with the same core business, or set up joint ventures," TCL Corp said in the prospectus.
TCL Corp, which makes TVs with France's Thomson SA and controls about 10 percent of China's cellphone market, the biggest in the world by subscribers, has been widening its international exposure since 1999 when it set up a television factory in Vietnam.
It would also spend 946 million yuan upgrading technology and on other projects, it said, with the rest of the money being used to repay bank loans to improve the company's asset to liability ratio.
TCL's move marks the first time China's 13-year-old stock market will see a parent company merge with a listed unit and launch an IPO of the group.
China's largest companies only list a portion of their business, with oil giant Sinopec Corp, top steel maker Baoshan Iron and Steel Co and hydropower company Yangtze Electric Power Co Ltd representing their respective parents on mainland bourses.
(China Daily January 5, 2004)
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