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Successful Cases |
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Corporate Restructuring &
Int'l Private Placement
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Fontainburg Role:
Project Coordinator & Financial Advisor
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Case Background |
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Our client was one of the largest manufacturers and a leading player in the telecom equipment industry in China. The group had total assets of over RMB 10 billion and annual sales of nearly RMB 10 billion, and consisted 13 subsidiaries, one of which was listed on the Shanghai Stock Exchange. Despite the rapid growth and smooth financing channel of the listed subsidiary, the parent company gradually encountered various problems including slow growth, ambiguous strategic positioning of related businesses, complex ownership structure, weak corporate governance, and lack of independent financing channels at the group level. |
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Client's Requirements |
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Considering the above, Fontainburg's mandate was to propose a more efficient corporate structure and identify an immediate additional source of financing. |
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Approach and Key Issues |
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Fontainburg worked to identify a strategic organizational platform to address the above issues and position the group to be an attractive investment both in the short and longer-term. In addition, Fontainburg worked to resolve a conflict of differing investment outlooks from the various subsidiaries, especially considering weakening market fundamentals at that time.
In addition, depending on the desired financing method, issues such as reasonable and justifiable valuation of the group, an equity dilution effect, and an exit strategy for investors needed to be considered. |
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Fontainburg Solutions |
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Following a thorough investigation of all of the group's subsidiaries, Fontainburg prepared a comprehensive investment memorandum in accordance with the standards of international capital markets. In addition, the investment rationale was developed from various angles such as industry dynamics, demographic influences, competitive landscape, management standard, and economic development trends.
Fontainburg put forth a scheme of private placement with the intent to raise RMB 0.5 – 1 billion in the international capital markets. Carefully designed, this scheme would sustain the development of the group as a whole and provide a multi-level, multi-class financing structure to help alleviate equity dilution concerns. This scheme would also address the concerns of a viable exit strategy for any potential investors. |
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