ZTE eyes R&D growth with 3.6 billion yuan bond

China's telecommunication hardware maker ZTE (0763) has proposed to issue 3.58 billion yuan (HK$3.91 billion) worth of bonds that can be converted into its Hong Kong-listed shares, with the net proceeds to be used to enhance the company's research and development investments.

The bonds are zero-coupon, US dollar-settled and have a convertible price set at HK$30.25 per share, nearly 16 percent higher than ZTE's Monday close of HK$26.01.

Shares of ZTE once lost 6 percent, falling to HK$24.55 on Tuesday morning but later rebounded to HK$25.80, only about 1 percent lower than the previous close.

ZTE plans to use the net proceeds from the bond issuance to enhance its R&D investments in computility product, according to an exchange filing released on Tuesday morning.

The net proceeds are estimated to be about US$494.3 million (HK$3.86 billion), representing a net issue price of around HK$29.90 per conversion share based on the initial conversion price.

The bonds will be due on August 5, 2030.

STAFF REPORTER