Shares of MicroPort Scientific, the Chinese medical-device company, experienced a significant decline following the announcement of its plans to raise $220 million in convertible bonds. This move has caused concern among investors about potential dilution of shareholding in the future. On Wednesday, the company’s shares closed 25% lower at 8.68 Hong Kong dollars, marking their largest one-day percentage drop since listing in 2010. Year-to-date losses now stand at 58%.
The company, based in Shanghai, stated that it will issue five-year convertible bonds in order to refinance its offshore debt. These bonds will carry a coupon rate of 5.75% and have an initial conversion price of HK$12.779, representing a 10.5% premium to shares’ Tuesday closing price. If fully converted, these bonds would account for 7.3% of MicroPort’s current share capital, assuming no further issuance of shares.
In addition to the issuance of convertible bonds, MicroPort Scientific has also revealed its plans to repurchase approximately $217 million of previously issued zero-coupon convertible bonds due in 2026, leaving a total outstanding amount of $448 million. The company has expressed its intention to continue buying back existing convertible bonds.
Despite the recent decline in share price, analysts remain optimistic about MicroPort Scientific’s prospects. Citi Research analysts, for instance, maintain a buy rating and a target price of HK$25. They highlight the company’s confidence in achieving 25% growth in annual revenue and positive developments in its surgical robot and orthopedics businesses.
