Daphne International Holdings, a retailer of ladies’ footwear in China, has entered into an agreement with TPG Capital under which TPG will make an investment in Daphne through the subs
Daphne International Holdings, a retailer of ladies’ footwear in China, has entered into an agreement with TPG Capital under which TPG will make an investment in Daphne through the subscription of CNY550m convertible bonds with warrants.
Chen Ying-Chieh, chairman of Daphne, says: "We are delighted to have TPG as our strategic partner. We believe that TPG shares the same strategic vision of our company and expect this partnership to not only help us in further solidifying our leadership position in the domestic market in China but also contribute to transforming Daphne to become a world-class company."
Under the agreement, TPG has agreed to subscribe for unsecured convertible bonds due 2014 in the aggregate principal amount of CNY550m. The bonds carry an annual coupon of 3.125 per cent payable semi-annually, and will be convertible, subject to certain conditions, into Daphne’s new ordinary shares at an initial conversion price of HKD3.50 per ordinary share. The bonds will be redeemed at par if not converted.
In addition, TPG will receive 100 million warrants with the right to subscribe for one ordinary share each, with an initial exercise price of HKD4.00 per warrant. The warrants have a maturity of five years. If exercised in full, TPG will receive 100 million new ordinary shares in Daphne.
TPG will hold 278,510,572 ordinary shares, equivalent to approximately 14.5 per cent of the total enlarged issued share capital of Daphne, assuming the bonds are fully converted and the warrants are fully exercised.
Upon closing, the company will receive the US-dollar equivalent of CNY550m (or approximately USD81m) of gross proceeds from the issuance of the convertible bonds with warrants which will be used for further expansion of its Daphne and Shoebox store network in China. In addition, the company expects to raise a further HKD400m (or approximately USD52m) upon the full exercise of the warrants, which will be used for general working capital purposes.
Mary Ma, managing director of TPG, says: "We are confident in the long-term growth prospects of the consumer retail sector in China. We believe that Daphne, with its widely recognised ‘Daphne’ and ‘Shoebox’ brands, has every ingredient needed to grow from strength-to-strength and to accomplish even greater success in the future."
