BYD Co., the Chinese carmaker backed by Warren Buffett, said it will raise $1.42 billion yuan ($219 million) in its Shenzhen, China share sale, less than the company originally sought.
BYD will sell 79 million shares at 18 yuan apiece, the company said in a statement to the Shenzhen exchange. The automaker had planned to raise as much as 2.19 billion yuan, according to the statement. BYD listed in Hong Kong in 2002.
Shenzhen-based BYD is tapping the mainland stock market to raise funds for expansion even as the CSI 300 Index, tracking stocks on the Shanghai and Shenzhen exchanges, plunged 14 percent from its April high amid concern economic growth is slowing. The timing of the share sale wasn’t "good" and the pricing is "too low," Stella Li, senior vice president, said before the announcement.
“After the authorities approved our share sale, we had to go public within two months," Li said in an interview on June 17. "We’d rather list our shares next year but it’s out of our control."
The Hong Kong shares of the company have tumbled 48 percent this year, compared with a 5.8 percent decline in the Hang Seng Index. Prada SpA and Samsonite International SA have scaled back fundraising plans in Hong Kong amid the market slump.
BYD’s sales fell for 10 straight months through May amid slowing vehicle demand growth and rising competition as carmakers such as General Motors Co. and Nissan Motor Co. introduce cheaper models. China’s passenger-car sales fell for the first time in more than two years in May after the government ended tax incentives and subsidies.
"We have a good plan for our future, we feel that this is really priced too low," Li said. "We know our plan and we know our profitability in the next two to three years, we know we are going to do great and exciting things."
MidAmerican Energy Holdings Co., a unit of Buffett’s Berkshire Hathaway Inc., bought 9.9 percent of BYD in September 2008. The carmaker raised HK$1.4 billion ($180 million) in an initial public offering in Hong Kong in July 2002 by selling shares at HK$10.95 each.
BYD will issue the new shares on June 21, and receive $1.35 billion in net proceeds after deducting issuance fees, it said. The final share price was determined by factors including investor offers, the current industry situation, and valuations of comparable companies, the company said in a separate announcement to the Hong Kong stock exchange.
The carmaker said on May 5 it planned to use 1.14 billion yuan of the proceeds from the share sale for automobile research, development and production facilities in Shenzhen. The company would also spend 652 million yuan to expand its auto product and accessories unit and 400 million yuan on a lithium- ion battery production project, BYD said.
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