December 15, 2017 / 2:36 AM / 3 months ago

UPDATE 1-Sunac China plans $1 bln share sale for working capital

(Adds share price, background)

HONG KONG, Dec 15 (Reuters) - Property developer Sunac China Holdings Ltd said on Friday it would sell HK$7.82 billion ($1 billion) worth of new shares to its major shareholder, the second share placement in five months after it vowed to slash its debt ratio.

The highly-leveraged company has tapped offshore financing channels after a string of high-profile purchases led to increased scrutiny of its credit risks in China, including a $6.52 billion deal with Dalian Wanda Group and a $2.2 billion stake in Leshi Internet.

The Tianjin-based developer said it planned to sell 251.5 million new shares to Chairman Sun Hongbin’s Sunac International Investment Holdings Ltd at HK$31.1 per share, or an 11.9 percent discount to the stock’s previous close.

Sunac shares shed as much as 11 percent to HK$31.35 after the announcement on Friday morning.

A number of Chinese developers have issued new shares in the second half to raise fund amid a sector rally. Sunac’s shares have risen over 400 percent so far this year.

Sunac has said it aims to cut net gearing to 70 percent by the end of 2019 from 260 percent at the end of June, following a $1 billion offshore bond issue in August.

The latest share placement would not impact the company’s debt ratio. The proceeds would be for general working capital, Sunac said.

Sunac International will buy the new shares on completion of the sale of the same amount of existing shares at the same price to third-party investors. Its stake in the developer will be reduced to 47.8 percent from 50.7 percent on completion of the deal.

The deal came nearly 5 months after the developer raised HK$4 billion ($512.01 million) in a share placement in July.

In September, Sunac China said it would slow the rate of land purchases to boost profit and slash its debt ratio, after massive acquisitions attracted attention from a government bent on reducing corporate debt. ($1 = 7.8123 Hong Kong dollars) (Reporting by Donny Kwok and Clare Jim; Editing by Stephen Coates)

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