Swiber Holdings (Swiber) plans to issue up to 101.071m new shares via placement. The issue price is S$0.635, representing a discount of about 9.74% to the VWAP of S$0.7035 for trades on the preceding day before the trading halt. Swiber’s share base would be enlarged by about 20.0%, and net proceeds of about S$62.5m will be used for general working capital. This development is not a surprise given the relatively high placement activity level among O&M companies recently. For placements, we think it is worth looking at where the proceeds will be channeled to in order to ascertain whether it is beneficial to existing shareholders of the company. Meanwhile, we tweak our estimates to account for the placement, reducing our fair value estimate to S$0.61, based on 10x blended FY12/13F core earnings. Maintain HOLD.
To raise S$62.5m via placement
Swiber Holdings (Swiber) has entered into a placement agreement with Religare Capital Markets which will procure on a best efforts basis subscriptions for up to 101.071m new Swiber shares. The issue price is S$0.635 per placement share, representing a discount of about 9.74% to the VWAP of S$0.7035 for trades on the preceding day before the trading halt. Should the placement be fully subscribed, Swiber’s share base would be enlarged by about 20.0%, and the group will be able to raise net proceeds of about S$62.5m which will be used for general working capital.
Placements have been common in the O&M scene recently
This development is not a surprise given the relatively high placement activity level among O&M companies recently, such as Ezion Holdings, Ezra Holdings and of course Swiber Holdings. Besides the terms of the placement, it is worth looking at where the proceeds will be channeled to in order to ascertain whether a placement is beneficial to existing shareholders of the company. If they are used for 1) expansion plans and business opportunities that are earnings accretive, or 2) the equity raised is used to pay off debt that has a higher cost of capital, then it may be argued that the placement is in the interest of shareholders.
Maintain HOLD
After securing US$36m worth of charter contracts in early Mar, Swiber’s order book has risen to over US$1.1b. Looking ahead, the group is likely to secure more projects, given the buoyant industry outlook and its strong foothold in certain geographic areas. The focus should be on execution at decent margins. Meanwhile, we tweak our estimates to account for the placement, reducing our fair value estimate to S$0.61, based on 10x blended FY12/13F core earnings. Maintain HOLD.
Swiber Holdings (Swiber) has entered into a placement agreement with Religare Capital Markets which will procure on a best efforts basis subscriptions for up to 101.071m new Swiber shares. The issue price is S$0.635 per placement share, representing a discount of about 9.74% to the VWAP of S$0.7035 for trades on the preceding day before the trading halt. Should the placement be fully subscribed, Swiber’s share base would be enlarged by about 20.0%, and the group will be able to raise net proceeds of about S$62.5m which will be used for general working capital.
Placements have been common in the O&M scene recently
This development is not a surprise given the relatively high placement activity level among O&M companies recently, such as Ezion Holdings, Ezra Holdings and of course Swiber Holdings. Besides the terms of the placement, it is worth looking at where the proceeds will be channeled to in order to ascertain whether a placement is beneficial to existing shareholders of the company. If they are used for 1) expansion plans and business opportunities that are earnings accretive, or 2) the equity raised is used to pay off debt that has a higher cost of capital, then it may be argued that the placement is in the interest of shareholders.
Maintain HOLD
After securing US$36m worth of charter contracts in early Mar, Swiber’s order book has risen to over US$1.1b. Looking ahead, the group is likely to secure more projects, given the buoyant industry outlook and its strong foothold in certain geographic areas. The focus should be on execution at decent margins. Meanwhile, we tweak our estimates to account for the placement, reducing our fair value estimate to S$0.61, based on 10x blended FY12/13F core earnings. Maintain HOLD.
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