Household Appliance News
- Gome eyes seven regional centers
Date: 15-May-2007 Sources: (Shenzhen Daily)
GOME Electrical Appliances Holding Ltd., China's top electronics retailer, will spend up to US$168 million on seven regional distribution centers after it raised around US$790 million by selling shares and convertible bonds.
The move follows news late Friday that Gome was raising up to US$843 million by selling shares and bonds.
On Sunday, Gome said it raised HK$1.46 billion (US$190 million) in a top-up share placement of 110 million shares at HK$13.30 apiece. The firm had proposed 4.6 billion yuan (US$600 million) in seven-year convertible bonds, with the option to issue additional bonds of 400 million yuan.
'This is all about improving our operating efficiency and economies of scale as we expand and solidify our position in the market,'president Chen Xiao said Sunday.
Chen did not disclose further details about the distribution centers.
Thirty-five percent of the total proceeds, including optional bonds, from the issues will be used to purchase or refurbish stores. Around 20 percent, or up to US$168 million, will be used to set up the regional distribution centers, Chen said.
Five percent would go toward improving logistics support, with the remaining 40 percent allocated for enhancing operational efficiency and other purposes.
Gome will apply to the Singapore Exchange for the listing of the bonds.
'Each stock exchange has its own benefits,'said Curt Lam, head of corporate finance and development. 'We simply chose Singapore because of flexibility and timing - there's really no big deal to it.'
Venture capital firm Warburg Pincus is also selling 90.9 million existing Gome shares in the same price range, for up to US$159 million, to institutional investors.
Gome, which has been expanding at a breakneck clip to try and gain scale in a cut-throat industry and compete with an influx of foreign rivals led by Best Buy, plans to set up 170 news stores across 15 cities this year alone.
Gome said in March it was keen on raising funds for expansion and restructuring by bringing in strategic investors, listing yuan-denominated A shares on the mainland or through a bond issue.
Gome has said it hoped to buy some 200-plus stores it manages for its unlisted parent, but did not provide a timetable Sunday.
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