KUALA LUMPUR: Eco World Development Group Bhd (EW Bhd) has fixed its rights issue of 656.74 million new shares at an issue price of RM1.20 apiece, and the exercise price for its warrants at RM2.08 each.
In a filing with Bursa Malaysia yesterday, the property developer said the price of its rights shares represents a discount of 36.51% to the theoretical ex-rights price (TERP) of EW Bhd’s (fundamental: 0.95; valuation: 0.3) shares at RM1.89, based on a five-day volume-weighted average market price (VWAMP), including Feb 16, of RM2.23 per share.
“The [warrants’] exercise price represents a premium of 10% over the TERP of EW Bhd shares of RM1.89 per share, based on the said five-day VWAMP of Eco World shares up to and including Feb 16, 2015,” it added. EW Bhd had proposed a renounceable rights issue of 656.74 million new shares on the basis of one rights share for every two existing EW Bhd shares. The issue comes with 525.39 million free detachable warrants on the basis of four warrants for every five rights shares subscribed.
EW Bhd also said it had yesterday entered into an underwriting agreement with CIMB , AmInvestment and Maybank Investment Bank for the three banks to underwrite an aggregate 113.52 million rights shares, representing 17.29% of the total issue size of the rights issue with warrants. EW Bhd shares fell five sen or 2.22% to close at RM2.20 yesterday, bringing a market capitalisation of RM2.89 billion.
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This article first appeared in The Edge Financial Daily, on February 18, 2015.