Esprit Holdings Ltd. is turning to investors to fund its restructuring.
The company will raise at least 5.17 billion Hong Kong dollars, or $666.9 million at current exchange, by selling 646.1 million rights shares. The offering is fully underwritten and being handled by HSBC and UBS.
There will be one right issued for every two existing shares. The right will be priced at 8 Hong Kong dollars, or $1.03. That’s a 35.7 percent discount from the stock’s closing price of 12.44 Hong Kong dollars, or $1.61, Monday.
Esprit said the new funds will go toward its plan to transform the business by revitalizing the Esprit brand, improving its product processes, refurbishing stores, strengthening it supply chain and fueling expansion.
“The directors have decided to undertake the rights issue to give the company financial flexibility and to provide funding for the execution of the transformation plan of the company,” said chairman Raymond Or. “In making this decision, the directors have considered the current challenging operating environment and economic uncertainties.”
Last month, Esprit posted an 11-fold increase in annual profits, but missed analyst forecasts. The company has moved to its brand focus and this year pulled out of North America.
Esprit still has more than 1,000 directly managed stores and more than 10,000 points of sale.