Chinese mining company MMG 1208.HK has announced plans to raise approximately HK$9.08 billion ($1.16 billion) through a rights issue. The primary purpose of the fund-raising is to repay existing debt and support the ongoing development of the company’s operating mines.
The rights issue, which is the largest such offering in Hong Kong for more than a year, will involve the issuance of 3.47 billion new shares. The subscription price is set at HK$2.62 per share, representing a discount of about 31.41% to MMG’s last closing price of HK$3.82 on Friday.
The deal is the third-largest rights issue in Hong Kong in the past five years, according to Dealogic data.
Separately, Chinese coal miner Yankuang Energy Group 600188.SS, 1171.HK also raised HK$4.96 billion by selling 285 million shares at HK$17.39 each to repay its existing debt.
The news of the fundraising activities had a mixed impact on the companies’ stock prices. Shares of Yankuang Energy fell 9.5% on the Hong Kong exchange, on course for their biggest intraday drop in 11 months.
Meanwhile, MMG’s shares dropped as much as 11.3% to a two-month low after trading resumed following the announcement of the rights issue.
The capital raised from these transactions will enable MMG to strengthen its financial position and support the ongoing development of its operating mines. For Yankuang Energy, the debt repayment will help improve its balance sheet and financial stability.
These fundraising efforts reflect the companies’ strategies to address their financing needs and support their respective business operations in the current market environment.