Struggling high street retailer Esprit is hoping to restructure
its business and re-fresh its brand by raising new capital with investors.
The company aims to secure 5.17 billion Hong Kong dollars, or 666.9 million dollars at current exchange, by selling 646.1 million rights shares.
The offering is fully underwritten and being handled by HSBC and UBS.
There will be one right issued for every two existing shares. The right will be priced at 8 Hong Kong dollars, or 1.03 dollars – a 35.7% discount from the stock’s closing price of 12.44 Hong Kong dollars, or 1.61 dollars on Monday.
The new funds will go towards revitalising the Esprit brand, improving product processes, refurbishing stores, strengthening it supply chain and increasing its retail expansion.
“The directors have decided to undertake the rights issue to give the company financial flexibility and to provide funding for the execution of the transformation plan of the company,” said chairman Raymond Or. “In making this decision, the directors have considered the current challenging operating environment and economic uncertainties.” The company has moved to its brand focus and this year pulled out of North America. Esprit operates more than 1,000 directly-managed stores and more than 10,000 retail stores.