By Clarence Leong
Shares of Country Garden Holdings Co. fell after the company said it will place new shares at a discount to raise funds, as sluggish property sales in China crimp developers' finances.
The Chinese home builder's stock fell 14% to HK$3.20 in Wednesday morning trade in Hong Kong and was headed toward the biggest one-day percentage drop since March. It has lost 54% so far this year.
Country Garden said in a filing Wednesday that it plans to raise 2.83 billion Hong Kong dollars (US$360.5 million) gross proceeds from the share placement. Each stock will be placed at HK$3.25, representing a 13% discount to its Tuesday's close.
The developer said proceeds would be used to refinance existing offshore debt, for general working capital and future development purposes.
Country Garden, one of China's largest private developers, posted a 35% on-year fall in contracted sales for June, following declines of 50% for May and 57% in April.
While debt repayment deadlines loom for Country Garden and other developers, property sales have remained downbeat amid weak home-buyer demand.
Shares of other Hong Kong-listed Chinese developers were also lower Wednesday. China Resources Land Ltd., Longfor Group Holdings Ltd. and China Overseas Land & Investment Ltd. were recently down by between 2.0% and 3.9%.
The city's benchmark Hang Seng Index was 1.6% lower at 20575.00.
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(END) Dow Jones Newswires