Wing On Travel (Holdings) will receive a $1 billion injection from a pool of investors that includes units of Hutchison Whampoa and China Strategic Holdings for expansion and debt reduction.
Its share price yesterday rose 21.12 per cent to close at 86 cents.
The deal, involving the issue of convertible exchangeable notes, took the market by surprise as the travel agency had debts of almost $1 billion in the middle of last year with a market capitalisation of just $376.3 million.
'We are eyeing investment opportunities in hotel operations and currently in negotiations with several partners, which may lead to business co-operation in getting mainland tourists for outbound sightseeings,' Wing On chairman and executive director Lawrence Yu Kam-kee said.
Under the subscription agreement, China Enterprises - the largest shareholder of Wing On with a 19.8 per cent stake after cashing in $119.7 million in a recent share placement - would snap up $300 million of the five-year notes, Hutchison International would take $200 million and a pool of nine institutional investors would take the remaining $500 million.
Management declined to identify the institutional investors or fund managers who have joined the subscription.
China Strategic, controlled by businessman Charles Chan Kwok-keung, holds a 55.2 per cent equity and an 88.79 per cent voting interest in China Enterprises, an investment holding firm traded on the United States over-the-counter market.
