FAST NEWS: E-House rights issue for debt restructuring

The latest: Real estate services provider E-House (China) Enterprise Holdings Ltd. (2048.HK) announced a rights issue plan on Monday, proposing a rights issue of 12 shares for every 10 shares, which is expected to result in the issuance of 2,098 million rights shares, accounting for 54.6% of the enlarged total number of shares in issue.

Looking up: The rights issue is expected to raise HK$483 million ($61.9 million), which will be used to support the company’s debt restructuring plan.

Take Note: The rights issue is priced at HK$0.23 per share, a discount of 20.7% to the company’s closing price of HK$0.29 on Monday, coupled with the large proportion of the rights issue, which may have a negative impact on the share price.

Digging Deeper: As a major real estate agent and property manager offering a range of services, E-House was an early market leader in China. Over the past two years, its business has been hit by a series of events, such as the slowdown in China’s real estate industry and the closure of many sales offices with the Covid outbreak. Last year, its revenue plunged 43.2% to 5.03 billion yuan ($702 million) and recorded a net loss of approximately 5 billion yuan. The company has filed for protection under Chapter 15 of the U.S. bankruptcy code in New York and began a debt restructuring plan, after failing to pay a nearly $2.1 billion bond that matured last April and triggering a series of defaults on other related debt securities.

Market Reaction: E-House shares dropped on Tuesday and closed down 5.2% at HK$0.275 by the midday break. The stock now trades near the lower end of its 52-week range.

Translation by Jony Ho

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