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Friday, October 11, 2013

MBSB to raise RM1.47bil through proposed renounceable rights issue

Source: http://www.thestar.com.my/Business/Business-News/2013/10/11/MBSB-to-raise-RM147bil-Company-proposes-renounceable-rights-issue-to-expand-business.aspx

PETALING JAYA: Malaysia Building Society Bhd (MBSB) has proposed a renounceable rights issue to raise up to RM1.47bil, which will be used to expand its financing business and purchase financial instruments.

It said yesterday of the RM1.47bil to be raised, RM1.06bil would be used to expand its financing business while RM400mil would be used to purchase financial instruments qualified as liquefiable assets.

The remaining would be used to defray expenses relating to the rights issue.

MBSB said the entitlement basis for the proposed rights issue and the issue price had not been fixed as yet so that the board would have the flexibility in the pricing and the number of rights shares to be issued.

It added the issue price and entitlement basis would depend on the prevailing market conditions, market price of the shares and the resultant theoretical ex-rights price (TERP) based on the five-day volume weighted average price (VWAP) of the shares immediately preceding the price-fixing date.

The issue price would be at a discount of at least 20% but not more than 30% from the TERP based on the five-day VWAP of MBSB shares immediately preceding the price-fixing date.

“For illustration purposes only, based on 1.74 billion MBSB shares in issue as at Sept 30, 2013, being the last practicable date prior to this announcement, the capital outlay required from a entitled shareholder holding 1,000 MBSB shares who wishes to subscribe for his entitlement is approximately RM844 (based on the maximum gross proceeds of RM1.47bil),” it said. MBSB said its major shareholder, the Employees Provident Fund Board (EPF) which holds a 64.7% stake, had undertaken to subscribe in full its entitlement subject to, inter-alia, a minimum of 20% discount to the TERP.

The EPF’s subscription amount pursuant to the undertaking based on the maximum gross proceeds would be about RM920mil.

The remaining portion of rights shares for which no undertaking was obtained would be fully underwritten. MBSB said the proposed rights issue was part of the company’s capital management strategy to strengthen its core capital and consequently, improve its shareholders funds as well as gearing.

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