HONG KONG, June 23 (Reuters) - Shares of scandal-tainted Chinese electronics retailer GOME rose 81 percent when trading resumed on Tuesday following a seven-month suspension, after the company announced a major capital raising move and signed on U.S. private equity firm Bain Capital as a new investor.
GOME shares extended gains to HK$2.02 after surging 79 percent at the opening. The stock last traded at HK$1.12 before shares were suspended on Nov. 24, 2008.
On Monday, GOME said Bain had agreed to take up to 23 percent of the company's shares under a plan to raise $418 million or more through the issue of debt and new shares.
Analysts were generally upbeat on the plan, welcoming the infusion of new capital, the addition of a major investor like Bain, relatively mild dilution of the company's stock, and an end in sight to a months-long scandal that has plagued the company. The company's founder, Huang Guangyu, is under investigation for alleged financial irregularities.
Merrill Lynch upgraded GOME to "buy" from "underperform", saying the "worst is over and short-term risk is under control".
"With the stock suspended for seven months, fund raising underway and trading to resume, the saga finally comes to an end," wrote analyst Chen Luo in a research note. "Despite our drastic EPS cut, we believe the worst is over and it's time to revisit the name." (Reporting by Doug Young; Editing by Chris Lewis)