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New World Development (NWD) is set to receive $2.8bn from the share sale of its subsidiary NWS Holdings to the Hong Kong’s billionaire Cheng family. Chow Tai Fook Enterprises (CTFE), which holds about 45.2% of NWD shares, has offered to buy ~97% of NWS Holdings’ shares for up to HKD 35.5bn ($4.5bn). The transaction will see $2.8bn in cash transferred from the company to its majority shareholder NWD. CTFE’s offer was made at HKD 9.15/share, a 14.5% premium over Friday’s last closing price. Jefferies analyst Sam Wong aid, “The deal should strengthen NWD’s cash flow position and give NWD more flexibility around refinancing”. Once the deal is completed, NWD plans to a declare special dividend of HKD 4bn ($500mn) with the will remaining amount being used to repay debt. The deal will also help lower NWD’s net debt-to-equity ratio to ~42% from 47%.
NWD’s Perps rallied by 2-3 points on the back of the above news.
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