By Gina Lee
Investing.com – China’s third-largest developer Sunac China Holdings Ltd. raised $580 million through a top-up share sale after a liquidity crisis led to a tumble on the developer’s dollar bonds on Wednesday.
However, Sunac’s Hong Kong shares dived 16.27% to HK$9.88 ($1.27) by 11:00 PM ET (4:00 AM GMT).
Sunac sold 452 million shares at HK$10 per share, a 15% discount on their Wednesday close, according to the deal terms obtained by Bloomberg. The company said half of the approximately 50% of the net proceeds from the sale will be used for loan repayment, while another 50% will be used for operations.
This is the second shares sale within two months. The company raised around $953 million through the sales of new shares and a stake in its property management unit, Sunac Services Holdings Ltd., in November 2021.
A court-ordered asset freeze on one of the company’s units earlier in the week triggered worries about the company’s financial health. Sunac has resolved the issue with a business partner and is now working to withdraw the court orders, it told Bloomberg on Wednesday.
The “panic” selling by bondholders, as described by Bloomberg Intelligence analyst Daniel Fan, dragged Sunac’s 2024 notes to about 47 cents on the dollar during Wednesday’s session.
To deal with its debt woes, Sunac raised $2 billion in late 2021 via measures including selling office and hotel projects in Shanghai and Hangzhou, placing shares, borrowing from its controlling shareholder and the Sunac Services Holdings Ltd. stake sale. It is also exploring selling its culture and tourism portfolio, which it acquired over the past four years for about CNY65 billion ($10.21 billion).