China’s ZTE plans $1.7 billion A-share sale to fund 5G R&D

HONG KONG (Reuters) – ZTE Corp said it was looking to raise 11.51 billion yuan ($1.7 billion) from a private placement of A shares, and that it plans to use the proceeds for research and development (R&D) of 5G networks as well as working capital. That represents a discount of 18.2% to ZTE’s A-share closing price of 36.92 yuan in Shenzhen on Wednesday. None of the subscribers will become a substantial shareholder upon completion of the share sale, the company said, without providing further details. “Our fundamental view remains negative, but near-term stock price could have support,” Jefferies said, adding it worried about margin pressure and market share pressure on 5G. Hong Kong-listed stock briefly rose 3.7% to HK$28.05, the highest since March 2018.

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