Warburg Pincus to invest US$150m in GOME
(Xinhua)
Updated: 2006-02-03 10:08

GOME Electrical Appliances Holding Limited (GOME), a giant retail chain of electrical appliances and consumer electronics in China, announced in Hong Kong Thursday that Warburg Pincus, a leading global private equity investment fund, will invest in GOME through the issuance of 125 million U.S. dollars convertible bonds and 25 million U.S. dollars warrants.

When the investment is completed, Warburg Pincus will hold 176, 680,630 ordinary shares, which is equivalent to about 9.71 percent of total issued capital of GOME, assuming the bonds and warrants are fully converted and exercised, according to their agreement.

Under the subscription agreement, Warburg Pincus has agreed to subscribe for five-year convertible bonds due 2011 in the aggregate principal amount of 125 million U.S. dollars. The bonds carry an annual coupon of 1.5 percent payable semi-annually and a yield to maturity of 3.26 percent.

In addition, Warburg Pincus will also subscribe for 25 million U.S. dollars five-year warrants for new ordinary shares of GOME at a subscription price of 3 million U.S. dollars. Warburg Pincus has the right to exercise the warrants at an initial exercise price of 7.70 Hong Kong dollars (about 0.99 U.S. dollar) per ordinary share.

Upon closing, GOME will raise approximately 980 million Hong Kong dollars (about 126.5 million U.S. dollars) on the convertible bond issuance which will be used for business expansion in China.

In addition, GOME expects to raise a further 192 million Hong Kong dollars (about 24.77 million U.S. dollars) upon the full exercise of the warrants, which will be used for general wording capital purposes.

Wong Kwong-yu, chairman and controlling shareholder of GOME, said at a press conference that Warburg Pincus' investment clearly demonstrates the firm's confidence in the industry, in GOME, and in GOME'S management.

"Going forward, we will work closely with Warburg Pincus to further improve our operating efficiency and enhance GOME's overall competitive position in the market place," said Wong.

Sun Chang, managing director of Warburg Pincus, said that he believed that the sales market of electrical products in China will boom in the future.

"With China's booming economy and consumption sector, the outlook for the retail industry in household appliances and consumer electronics is highly encouraging," he said.

Warburg Pincus is a leading global private equity investment fund with more than 12 billion U.S. dollars under its management and with another 7 billion U.S. dollars available to invest.