Monday Oct 14, 2024
Monday Oct 14, 2024
Monday, 14 October 2024 01:31 - - {{hitsCtrl.values.hits}}
Chairperson Krishan Balendra
The Rights Issue to raise Rs. 24 billion by top blue chip John Keells Holdings PLC (JKH) has drawn a demand worth Rs. 27.4 billion.
JKH’s 1 for 10 Rights Issue amounted to 150.26 million shares at Rs. 160 each with a total value of Rs. 24.04 billion. JKH also announced a sub-division of shares 1 into 10 post-Rights.
When the issue closed last week, the level of subscription of the Rights Issue, including the applications received for additional shares, was for 171.4 million shares worth Rs. 27.4 billion.
Analysts said the oversubscription reaffirms existing shareholders and new investors’ confidence in the top blue chip’s future upside. JKH has over 14,000 shareholders. JKH’s share price has been on the rise in recent weeks as well. Last week, it rose by Rs. 10.75 to close at Rs. 197 after peaking to Rs. 199. Over 6.88 million JKH shares traded for Rs. 1.36 billion. In the previous week, the JKH share price rose by Rs. 13.50.
Post-Rights announcement, the JKH share price closed at Rs. 171.75 on 31 July.
It is the highest Rights Issue since JKH raised Rs. 23 billion in 2013, which, however, included warrants contributing over Rs. 16 billion in a fundraising move worth Rs. 40 billion, also for the integrated resort project.
In announcing the Rights Issue in late July, JKH said proceeds will support the company’s financing obligations, which have increased due to the higher than anticipated equity funding requirement of the Project (previously branded as ‘Cinnamon Life Integrated Resort’) required to bridge the impacts of the delayed cash flow generation from operations due to the deferment of the commencement date, including gaming operations.
JKH said the capital raising will result in strengthening the balance sheet of the company by reducing its levels of leverage, providing the company greater flexibility in its future investments.
The company has secured a partnership with one of the world’s leading casino and integrated resort operators, Melco Resorts and Entertainment Ltd. Melco has made a commitment to invest approximately $ 125 million in fitting out and equipping the gaming space.
This partnership was finalised subsequent to the publication of regulations governing the issue of a casino licence under a structured and transparent framework. The revised licensing criteria provides for a clear framework for the issuing of licences with stipulated minimum investment while also assuring Melco, as investor and operator, and WPL, as landlord, a long-term licence for a casino to be operated within the project for a period of 20 years.
JKH said the time taken for the development and gazetting of this new framework resulted in a delay in finalising agreements with Melco. “While this had a corresponding impact on the timelines of commencing the gaming operations within the Project from that envisaged last year, the company is of the view that the clarity and long-term nature of the licensing framework is more beneficial to the Project,” JKH added.
The ‘Cinnamon Life’ hotel, restaurants, and banquet facilities will commence operations tomorrow while the gaming operations and retail mall will be operational in a phased manner, with overall completion of these elements scheduled for mid-CY 2025.
