IOI has proposed a 1-for-15 rights issue
Rights issue.
IOI has proposed a 1-for-15 rights issue of up to 420.99m shares at RM2.90 per share. The maximum proposed number of rights shares was derived after taking into consideration the potential enlarged share capital arising from its
Base on HWangDBS the Target prise could be diluted to RM4.10.
We were surprised at the size of the rights issue (only 129.7m shares net of 291.2m share buyback in the current FY), while the group’s net gearing as at 3QFY09 (incl. ST investments and MI) was still a decent 37.2%. Assuming the rights issue takes into account the exercise of CB II (already in the money) and ESOS (CB III is still far out of the money at RM11.00 exercise price), then IOI would issue 409.8m shares. This could dilute HwangDBS target price
to RM4.10 from RM4.40.
No specific purpose.
The group’s stated purpose for the rights issue was to fund capex, investment opportunities and debt repayment (depending on the final issue size). HwangDBS report suspect that the proceeds could be employed to fund new planting capex at the group’s Indonesian states.
IOI has proposed a 1-for-15 rights issue of up to 420.99m shares at RM2.90 per share. The maximum proposed number of rights shares was derived after taking into consideration the potential enlarged share capital arising from its
- Employee Share Option Scheme (ESOS) (95.0m shares);
- conversion of remaining US$99.0m CB II (74.6m shares); and
- conversion of remaining US$563.5m CB III (168.0m shares).
Base on HWangDBS the Target prise could be diluted to RM4.10.
We were surprised at the size of the rights issue (only 129.7m shares net of 291.2m share buyback in the current FY), while the group’s net gearing as at 3QFY09 (incl. ST investments and MI) was still a decent 37.2%. Assuming the rights issue takes into account the exercise of CB II (already in the money) and ESOS (CB III is still far out of the money at RM11.00 exercise price), then IOI would issue 409.8m shares. This could dilute HwangDBS target price
to RM4.10 from RM4.40.
No specific purpose.
The group’s stated purpose for the rights issue was to fund capex, investment opportunities and debt repayment (depending on the final issue size). HwangDBS report suspect that the proceeds could be employed to fund new planting capex at the group’s Indonesian states.
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