Hongqiao sells shares worth $275.9 million to pay down debt

One of China’s largest aluminium producers, China Hongqiao Group resorted to selling off some of their stocks raising $220 million to pay off some debts and buy some upstream assets.

On Thursday, 4th September, the Shandong province based company sold its shares at a rate of HK$6.19 per share which is a 9% discount from the September 3rd closing rate of HK$6.81, as recorded in a term sheet viewed by FinanceAsia.

The ultimate sell rate was at the lower end of the initial range of $HK6.19 to $HK6.36 per unit which was already at a discount of 6.6% to 9.1% to the September 3rd closing rate.

Within hours after China Hongqiao launched the deal in Hong Kong, the books were covered which is largely due to the broad-based investor interest, as reported by close sources. The majority of the orders came from existing share holders, hedge funds and long-only institutional investors.

According to sources, the majority of the orders were made by the Asian investors but the interesting thing is that there were some US and UK too among the 60 participating investors. Between 60-70% of the book was made by the top 10 investors.

The source also added that even though the demand was not enough to exhaust all the 62.6 million shares it was enough to bring $220 million by increasing the deal size by 10%.

The initial number of 250.4 million shares on offer represented 4.2% of China Hongqiao's $5 billion market capitalization, where the sole bookrunner was Bank of America Merrill Lynch.