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On Friday, China Cord Blood Corporation (NYSE: CO) priced a secondary issue of 8,050,000 ordinary shares at $4.50 per share, a steep 20% discount to the previous close of $5.66. Shareholders didn’t like the size of the discount and reacted by selling off their holdings of the company. The shares plunged $1.69 lower to $3.97, a 30% loss on very heavy volume.

China Cord Blood has two umbilical cord blood storage centers operating in China, one in Beijing and the other in Guangdong, along with a 20% interest in the Shandong Cord Blood Bank. The company purchased a 90% stake in a cord blood banking operation in Zhejiang province. Proceeds from the secondary offering are earmarked to pay for the Zhejiang center.

The latest offering consisted of 7 million shares from the company and 1.05 million shares from existing shareholders. The company’s share of the transaction was $31.5 million or $28.6 million after deducting fees and commissions.

China Cord Blood migrated to the NYSE on November 22, 2009, offering 3.3 million new shares at a price of $6.05. Previously, the company was listed on the OTC Bulletin Board exchange.

Before the offering, on June 30, 2010, its last financial reporting date, China Cord Blood had $47.7 million in cash on hand. After the offering it will have $76.3 million in cash and a market capitalization of $279 million.

Disclosure:
none.

Source: China Cord Blood Takes Hit on Secondary Offering