Hony invests another $193m in Lee & Man Handbags
Hony Capital has agreed to invest HK$1.5 billion ($193 million) in convertible bonds issued by Lee & Man Handbags, a Hong Kong-listed handbag manufacturer, potentially taking its interest in the company past 80%.
The bonds have an annual coupon of 3% and a tenure of seven years, after which they can be converted into equity at a price of HK$1.18 per share, according to a filing. However, Hony has the right to convert the shares at any time before the maturity date. The conversion price represents a discount of 5.6% to the closing price on the day prior to the announcement.
The deal could see the China-focused GP increase its stake in Lee & Man Handbags to 81.17% from the current 52.16%. The investment is being made via Hony Capital Fund VIII, which closed at $2.7 billion several months ago.
On the same day, Lee & Man Handbags also announced it would acquire a 60% interest in Beijing HHG Restaurant Management, a Chinese fast food chain, for RMB117 million ($15 million). Operated under the Hehegu brand, HHG has more than 80 directly-owned restaurants and 14 franchised outlets in Beijing, Tianjin and Hebei province.
Lee & Man Handbags spun off from Lee & Man Holdings, a Chinese chemicals maker which is also listed in Hong Kong, in 2011. In May, Hony acquired a 50.03% stake in the company from the Lee family for HK$487 million, becoming the largest shareholder.
Lee & Man Handbags generated HK$659 million in revenue last year, down 19.4% from 2014, while its net profit dropped 70% year-on-year to HK$10 million.
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