China's Gome Electrical Appliances said on Monday it will raise at least HK$3.24 billion (US$417 million) through an investment from Bain Capital and a share sell.
Under the deal, Bain will buy $233 million worth of seven-year convertible bonds that can be converted into an equity stake of 12.8% in Gome, the country's largest consumer appliance retailer, the company said in a statement on Monday.
The initial conversion price would be HK $1.18 per share, about 5.4% over the company's stock price before it was suspended on November 24.
Gome will also offer new shares, to be underwritten by Bain, at a 60% discount to the share's last price.
In all, the deal is expected to net Gome at least $417 million in fresh capital and give Bain an equity stake between roughly 10% and 24%.
Bain's investment would afford it three seats on Gome's board of directors, which now has 11 directors.
In a statement, Gome’s chairman and president, Chen Xiao, called the investment a “new phase in the company’s development”.
Jonathan Zhu, managing director of Bain, said in a statement that Gome’s business remained strong and that Bain saw long-term growth potential in the giant electronics retailer, which reported about $6.7 billion in revenue last year.
GOME' shares will resume trading from Tuesday, seven months after its suspension. The move is seen to help tide the company over amid the global economic crisis and a corruption probe centered on its founder and wealthy ex-chairman, Wong Kwong-yu.
Wong has been detained since last fall. Gome's CEO, Chen Xiao, replaced Wong as chairman.
Gome said an audit confirmed the sound foundation of its internal controls and corporate governance.