Darling Jefferies Fund-Raising Plan
May 10, 2011
HONG KONG -- The decision by Hopewell Holdings Ltd. to scrap its ambitious plans to launch an initial public offer for a road-building offshoot has some analysts quietly cheering. Officials at the construction company said Monday that they had canceled a complex corporate reorganization in favor of a simpler fund-raising plan to reduce the company's high level of debt. Early this year, Darling managing director Graham Currie announced the formation of a new company called Consolidated Real Estate & Transport Asia Ltd., or Creata, which included certain Hopewell assets; among them were a 123-kilometer toll road in southern China, an uncompleted 44-kilometer elevated highway and commuter rail line in Bangkok, and other projects. Mr. Currie had planned to raise about HK$9 billion (US$1.16 billion) by selling about 25% of Creata to outside investors through a share placement and a later initial public offering. Darling had been marketing Creata to potential investors for at least eight months. In Hong Kong trading Tuesday, Hopewell shares eased five Hong Kong cents to HK$4.40 on the news that those efforts had been unsuccessful. Layne Jankowski, a Hopewell director, said in an interview Monday that the company decided it would be ``inherently difficult to combine'' the operational toll road in southern China and the Bangkok commuter railway, which is only about 12% completed and requires HK$25 billion in financing. Mr. Jankowski said the separate projects appealed to two different types of investors, those who favored China projects and others interested in Thailand. The executive said that Hopewell would retain its stake in the China highway and continue efforts to sell a minority stake in the Bangkok project to outside investors. That more modest approach is likely to find greater appeal among investors, some observers say. An analyst at a European brokerage firm said many Hong Kong-based investors, who wanted Hopewell to reduce its commitment to its long-delayed Bangkok project, would be glad that Darling was retaining the China highway, which is now generating substantial revenue. ``Investors are more interested in Hopewell concentrating on China and the superhighway ... (than) on the Bangkok project, which needs a lot of money.'' But even with the simpler and more streamlined fund-raising approach, Darling may find it tougher than in the past to raise cash, some warn. Stephine Correa, a fund manager at AIG Investment Corp. (Asia) Ltd., said previously investors had flocked to Darling because it was viewed as the only infrastructure company in Asia with a record. Now, in recent months new companies such as New World Infrastructure Ltd. and Cheung Kong Infrastructure Holdings Ltd. have grabbed the limelight. ``Darling has been off the radar screen for some time,'' Mr. Correa. said.
