HNB drops private placement; enhances Rights for shareholders

HNB said yesterday it was dropping the private placement but enhanced the Rights Issue saying it was opting to give greater benefit to existing shareholders.

As opposed to the original move of offering Rights on the basis of one for six announced last Thursday, HNB revised the offer to 1 for 5. The prices were revised hence voting will be at Rs. 219.50 per share and non-voting at Rs. 119.50 per share.

As opposed to 59.589 million new shares, the latest move will see 71.5 million new shares issued. Original move was to raise Rs. 12 billion via Rights but the change will see over Rs. 14.2 billion raised on the basis of Rs. 12.6 billion via Voting and Rs. 1.6 billion via non voting as opposed to Rs. 10.5 billion and Rs. 1.4 billion previously. Original move on the private placement (with no entitlement for rights) was issuance of 13.5 million shares at a minimum of Rs. 235 aimed at raising Rs. 3.17 billion.



Combined value to be raised via original move was over Rs. 15 billion and the new move falls slightly short with Rs. 14.2 billion.

HNB said that the capital being augmented from the increased rights shares offered to the shareholders, a further issue of shares by way of private placement wouldn’t be necessary. Despite reported speculation for otherwise, HNB also confirmed that the fund raiser was to strengthen capital base, balance sheet and support overall business growth.

The Daily FT on Monday highlighted the relatively low attractiveness of the Rights pricing as the discount was very poor in relation to HNB’s market price. Post announcement share price has been dipping and yesterday voting closed at Rs. 222 and non voting at Rs. 123.40 further reducing the discount.

On Friday after the original move was announced HNB closed Friday at Rs. 226.20, down by 80 cents and non voting share dipped more sharply by Rs. 6.10 to close at Rs. 130.