Mid sized contractor Hsin Chong Construction Group (0404) will buy a commercial property in Beijing for 780 million yuan (HK$975 million) in its drive to build its property business in China.
In a stock exchange notice Monday, the company said the consideration would be met by funds totalling about HK$1.28 billion to be raised by placement of 1.35 billion shares.
The placement shares represent 129.9 percent of the current share capital of the company.
The funds will be used to acquire the entire shareholding of a company that owns the property.
The balance of the funds, after paying the consideration, would be used to redeem HK$250 million of convertible bonds of the company’s major shareholders and for business development and general working capital.
The commercial property “New Times Plaza” is located in Maliandao Road in Xicheng District in Beijing.
The building, which has 15 storeys over a basement of three storeys, has a gross floor area of 69,540 square metres (748,529 square feet) and was completed in early 2012.
A shopping mall occupies seven floors from the first floor of the basement to the sixth floor above ground while there are 168 office units from the 7th to 15th floors.
It has 364 car park spaces in the lower two storeys of the basement.
The company said Beijing has one of the highest per capita resident income levels in China and despite signs of a slowdown in the Chinese economy, the proposed acquisition was a good opportunity to increase its property investment in China.
It said that after the Tieling acquistion in November 2011 when the company bought a major property development project in Liaoning for HK$1.83 billion, it had been looking for suitable investment opportunities.
In its 2012 annual results released last month, the company posted a profit attributable to shareholders of HK$180 million, up 4.7 percent on the profit for the year before.
Turnover jumped 38.1 percent to HK$8.81 billion.
However gross margin fell 2.3 percentage points to 6.2 percent in 2012 which is significantly lower than the 10.6 and 10.5 percent margins recorded for 2009 and 2010 respectively.