Chow Tai Fook targets $1 billion via Hong Kong bond sale

Chow Tai Fook Jewellery Group Ltd. is seeking to raise HK$7.85 billion ($1 billion) from the sale of bonds convertible into stock, according to terms of the deal seen by Bloomberg News.

According to the terms, the bonds will mature around the end of June 2030. They will carry a coupon ranging from zero to 0.5%, payable semi-annually. The conversion premium is set between 35% and 45% above the reference price.

The company is controlled by Hong Kong billionaire Henry Cheng’s family, whose empire includes distressed developer New World Development Co. Chow Tai Fook will use proceeds from the offering to develop and finance its gold-jewellery business, upgrade stores and expand domestically and internationally, the terms show.

UBS Group AG, the sole bookrunner of the deal, is proposing to conduct a share placement aimed at facilitating hedging for investors buying the bonds, according to the terms. As part of that placement, Chow Tai Fook will buy back as much as HK$1.57 billion of shares.

Chow Tai Fook shares rose 6% to HK$13.72 in Hong Kong before news of the sale emerged.