Chow Tai Fook Holdings (00659) plans to issue HK$850 million 2.8% convertible bonds

According to the Zhitong Finance App, Chow Tai Fook (00659) issued an announcement recommending the simultaneous repurchase of HK$780 million 4.00% convertible bonds due in 2025. On July 10, 2025, the sole transaction manager entered into a transaction manager agreement with the company. According to this, the sole transaction manager has been appointed to propose simultaneous repurchases to (among others) assist the company in collecting intentions from holders of existing convertible bonds that may be willing to sell their existing convertible bonds to the company.

Eligible bondholders of existing convertible bonds that have accepted the invitation to sell their existing convertible bonds will be eligible to receive the repurchase price, which together amounts to 100% of the total principal amount of the existing convertible bonds submitted for repurchase under the simultaneous repurchase and accrued but unpaid interest on the existing convertible bonds.

On the date of this announcement, the Company has received commitments from eligible bondholders to sell existing convertible bonds with a total principal amount of approximately HK$566 million through the exclusive transaction manager, and the total remaining outstanding principal amount of the existing convertible bonds is approximately HK$74 million.

It is proposed to issue HK$850 million 2.80% convertible bonds due in 2027. On July 10, 2025, the company and the joint bookkeeper entered into a subscription agreement. According to this, according to the terms and conditions of the subscription agreement, the joint bookkeeper has agreed to subscribe or procure the subscription and payment company to issue bonds with a total principal amount of HK$850 million, according to the terms and conditions of the subscription agreement. The issue price of the bonds will be 100% of the total principal amount of the bond, and the face value of each bond will be HK$2,000,000 or its full multiple.

Based on the initial exchange price of HK$7.67 per share and assuming that the bonds are fully converted at the initial exchange price, the bonds can be converted to up to 108 million new shares, which is equivalent to approximately 2.686% of the company's issued share capital after allotting and issuing new shares through the total conversion of bonds.

The company believes that issuing bonds is an appropriate measure to restore the company's public shareholding as stipulated under the listing rules. In addition, issuing bonds can bring other benefits: providing the company with additional capital at lower financing costs to be used for simultaneous repurchases, while the balance is used for general corporate purposes; it will not have an immediate dilution effect on existing shareholders' shares; and if bonds are converted to new shares, it will enhance the company's capital base and facilitate the long-term development of the company.

The net proceeds will be approximately HK$843 million. The Company intends to use the net proceeds from the issuance of bonds for the following purposes: approximately HK$571 million for simultaneous repurchase funds and balances for the Group's general corporate purposes.