HONG KONG -- Varitronix International closed at 5.37 Hong Kong dollars ($0.69) Wednesday, up slightly from its previous close on Feb. 3.
Shares in the manufacturer of LCD displays for automobiles and other products had not been traded since that day because the company requested a stock trade suspension, citing an upcoming announcement of a significant business development. The announcement finally came Tuesday night, revealing a deal in which BOE Technology Group will purchase 400 million new shares in Varitronix at HK$3.50 per share.
Varitronix's stock price soared at market opening on Wednesday, shooting up 16%, or HK$0.82, to hit HK$6.10, thanks partly to the company's decision to pay HK$1.35 per share in special dividends after the new stock issuance.
But investors' enthusiasm fizzled as the day wore on, ending the first day back on the market up just 1.7%, or HK$0.09. The issuing price of HK$3.50 translates to a 34% discount to the Feb. 3 closing price of HK$5.28.
The new share allocation worth HK$1.39 billion ($178 million), is equivalent to 54.7% of Varitronix's existing shares. Of that amount, the company aims to use HK$992 million for investing in its TFT LCD (thin-film transistor liquid-crystal display) business, with a focus on cultivating demand for use in automobiles. The remainder will be used as operating expenses.