Property developer Sunac China to raise $952m
02:08, 15 November 2021
Stocks in China-based property developer Sunac China and its property management unit Sunac Services opened lower on Monday on plans to raise about $952m via two separate discounted share placements.
Sunac China said it will raise about $653m by issuing 335 million new shares for HKD15.18 per share, representing about 7.2% of the existing issued share capital of the company.
Sunac China stock opened over 6% lower at HKD15.98 on Monday. The issue price for the new shares comes at an over 10% discount to Sunac China’s last close of HKD17.04.
Unit share sale
The company also announced on Sunday that it will raise about $299m via the sale of 158 million shares in its wholly-owned unit Sunac Services Investment at a price of HKD14.75 per share.
Shares in Sunac Services tumbled over 10% on Monday, having closed at HKD16.56 on Friday. Sunac Services Investment holds about 54.76% of Sunac Services.
Sunac China’s capital raising comes amid a liquidity crunch in China’s debt-heavy real estate sector which has seen the likes of property firms Fantasia and Kaisa Group default on bond payments recently.
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The company added that Sun Hongbin, a controlling shareholder of Sunac China, will provide an interest-free loan of $450m to support the business.
Sunac China said it intends to use 50% of the total money raised for repayment of loans, while the rest of the capital will be used for general corporate purposes.
“While we acknowledge the dilution impact of such placement, considering the uncertain credit environment for developers, we think this is a right move for Sunac to gather sufficient funding on hand to get over its short-term tight liquidity that is driven by weak sales/refinancing difficulty,” said Stephen Cheung and Calvin Leung of Jefferies.