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Indebted Chinese developer plans US$1.4b share sale

Shanghai

INDEBTED Chinese developer Guangzhou R&F Properties could raise as much as US$1.4 billion by selling shares in Hong Kong.

The extra money would strengthen the company's finances, improve its credit rating outlook and help to lower funding costs, it said on Monday. The timing has not been set.

Investors will be assessing whether the fundraising plans have a whiff of desperation, given the company's debt load and declines in equity markets that argue against selling shares now.

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Should R&F raise the full amount sought, it will be the largest follow-on Hong Kong share sale by a Chinese developer ever, data compiled by Bloomberg showed.

A four-day, 10 per cent rebound in its stock before the announcement made an equity fundraising seem more palatable.

R&F's shares slid as much as 6.5 per cent in Hong Kong on Monday, leading declines by developers and extending the firm's fall this year.

The company plans to sell as many as 805.6 million H-shares in Hong Kong, which could raise as much as HK$10.7 billion (S$1.88 billion), based on last Friday's closing price.

R&F is rated Ba3 at Moody's, B+ at S&P and BB- at Fitch, according to data compiled by Bloomberg.

The company's net debt to equity, a measure of leverage, climbed to 214 per cent at the end of June, the second highest among 21 major developers tracked by Bloomberg Intelligence. BLOOMBERG