Norton Rose Fulbright has advised Renhe Commercial Holdings Company Limited on its “trilogy” transactions which consist of proposed rights issue, bank financing and tender offers. Once completed, the rights issue will be the first to be conducted by an eligible Hong Kong Stock Exchange issuer since the commencement of the Shanghai-Hong Kong Stock Connect.

The structure of Renhe’s “trilogy” transactions are also one of the first of their kind in the capital markets. The transactions are comprised of three aspects: rights issue, bank financing, and tender offers.

The three aspects are inter-conditionally structured. The rights issue is conditional upon certain conditions in the tender offers being fulfilled or waived; the issuance of the loans is conditional upon the tender offers and rights issue; and the financing of the tender offers by way of a combination of syndicated and bilateral loans, is based on the utility of proceeds raised from the rights issue and the loans.

Renhe was one of the selected eligible Hong Kong Stock Exchange issuers whose securities are eligible for southbound trading through the Shanghai-Hong Kong Stock Connect, which commenced on 17 November 2014. The rights issue, when completed, will be the first rights issue conducted by an eligible Hong Kong Stock Exchange issuer since the commencement of the Shanghai-Hong Kong Stock Connect.

The gross proceeds of the rights issue amounted to approximately US$436 million (HK$3.4 billion) and are fully underwritten by Haitong International Securities Company Limited.

Psyche Tai, corporate partner in the Hong Kong office of Norton Rose Fulbright, commented:

“Shanghai-Hong Kong Stock Connect is a significant breakthrough in opening up China's capital markets and giving investors a wider range of new investment possibilities. This transaction has attracted a lot of attention as it demonstrates a new and complicated “trilogy” structure, and the rights issue involved will become the first issued under the new scheme. We expect to see more investors trading and settling shares listed via this mutual market access scheme in the future.”

The team was led in Hong Kong by corporate partner Psyche Tai, and was assisted by of counsel Harold Tin, senior associate Rachel Chan, associate Marco Cheng and trainee Mavis Lee. The banking and finance team was led by partner Peter Haslam, assisted by senior associate David Milligan and associate Rick Wei.

The other legal practices involved were Mayer Brown JSM, Davis Polk & Wardwell, Sidley Austin, Allen & Overy, Jingtian & Gongcheng, Walkers Global and Conyers Dill & Pearman.