Market Pulse: Ezra Holdings
Ezra Holdings: Proposes rights and convertible bonds issues
Ezra Holdings has proposed a renounceable rights issue of up to 2.02b new shares at an issue price at a discount of not more than 50% to the theoretical ex-rights price for each rights share, on the basis of up to 200 rights shares for every 100 existing ordinary shares, as at a books closure date to be determined. It has also proposed an issue of fixed rate convertible bonds due 2020 with an aggregate principal amount of up to S$200m (~US$150m), convertible into new shares at a conversion price to be determined. Total estimated net proceeds is about US$289.5m, and an EGM will be convened to seek shareholders’ approvals. The market has already been expecting potential fundraising moves by Ezra, given its upcoming financial obligations. In our SOTP valuation, we assume that the maximum 2.02b new shares are issued in the rights issue, and as such lower our fair value estimate
from S$0.47 to S$0.26. Downgrade to SELL on valuation grounds. (Low Pei Han)
Source: http://www.ocbcresearch.com/
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