New World Development proposes $3.2 billion rights issue

BEIJING/HONG KONG, Nov 15 (Reuters) - Hong Kong property developer New World Development 0017.HK on Sunday proposed a rights issue to raise about HK$24.9 billion ($3.17 billion), a company filing showed.

New World Development has been trying to cut debt, dispose of assets and bolster liquidity amid tight credit conditions and a weak property market.

• The plan offers shareholders 11 rights shares for every existing share at HK$0.90 each, representing a 26.9% discount to the theoretical ex-rights price of HK$1.23 per share

• The subscription price also represents an 81.5% discount to the last closing price

• Controlling shareholder Chow Tai Fook Enterprises (CTFE), which owns about 45.3% of the company, has committed to take up its full entitlement and fully underwrite the remaining shares. The maximum CTFE commitment is about HK$18.7 billion

• A CTFE statement said it supports New World Development resuming dividend payments when its financial performance and liquidity permit.

• The company plans to use about 34% of the proceeds to prepay 10% of about HK$82 billion in bank loans and extend the maturity of the remaining 90% by two years

• It plans to use another third to repay debt including senior notes and deferred distribution of its perpetual securities

• After the rights issue, New World's net debt to total equity ratio will drop to 48.3% from 68.3%

• The developer aims to reduce total debt by between HK$40 billion and HK$50 billion by the end of 2031 to HK$93 billion to HK$103 billion

• New World's shares will resume trading on Monday after being suspended on Friday pending the announcement

($1 = 7.8455 Hong Kong dollars)