KS Energy (KSE) recently announced that it will undertake a renounceable underwritten rights issue to raise gross proceeds of about S$42.1m. The company is offering up to 111.65m new ordinary shares at an issue price of S$0.41 for each rights share, on the basis of one rights share for every four existing shares. The group will also be issuing S$45m worth of new convertible bonds to OCBC and TAEL One Partners. This ensures that KSE will have sufficient funds for the early redemption of its earlier issue of convertible bonds. We have been highlighting the early redemption option of KSE’s convertible bonds and the group has finally resolved this issue. With the increase in share base due to the rights issue, we lower our fair value estimate to S$0.64 (prev. S$0.78), still based on 1.2x FY13F NTA/share. Maintain HOLD.
Rights issue to raise net proceeds of S$40.9m
KS Energy (KSE) recently announced that it will undertake a renounceable underwritten rights issue to raise gross proceeds of about S$42.1m, or S$45.8m if all its convertible bonds (excluding those held by the undertaking shareholder and relevant bondholders) are converted into new shares. The company is offering up to 111.65m new ordinary shares at an issue price of S$0.41 for each rights share, on the basis of one rights share for every four existing shares.
Issuing S$45m new convertible bonds
KSE also announced that it has entered into a purchase agreement with Oversea-Chinese Banking Corporation Ltd (OCBC) and TAEL One Partners Ltd (TAEL One) for the proposed issue of new convertible bonds. KSE will issue S$45m in principal amount of new convertible bonds, of which OCBC will subscribe for S$30m and TAEL One the remaining S$15m. The initial conversion price is S$0.83/share, and the maturity date is three years later, on or about 21 Mar 2016.
Sufficient funds for early redemption of old convertible bonds
As at 6 Mar 2013, bondholders of KSE’s earlier issue of convertible bonds (due 2015, but early redemption Mar 2013) have tendered notices for an early redemption, within our expectations. 70% of the S$107m in principal amount of the convertible bonds are being redeemed, hence KSE will have to prepare S$76.125m in funds. This will be satisfied in the following ways: 1) S$40.9m from the rights issue, 2) S$30m from the issue of new convertible bonds and 3) S$5.2m from internal resources. OCBC and TAEL One currently hold S$28.5m and S$33.5m in principal amount of the convertible bonds due 2015, respectively.
Lowering fair value estimate to S$0.64
We have been highlighting the early redemption option of KSE’s convertible bonds and the group has finally resolved this issue. With the increase in share base due to the rights issue, we lower our fair value estimate to S$0.64 (prev. S$0.78), still based on 1.2x FY13F NTA/share. Maintain HOLD.
KS Energy (KSE) recently announced that it will undertake a renounceable underwritten rights issue to raise gross proceeds of about S$42.1m, or S$45.8m if all its convertible bonds (excluding those held by the undertaking shareholder and relevant bondholders) are converted into new shares. The company is offering up to 111.65m new ordinary shares at an issue price of S$0.41 for each rights share, on the basis of one rights share for every four existing shares.
Issuing S$45m new convertible bonds
KSE also announced that it has entered into a purchase agreement with Oversea-Chinese Banking Corporation Ltd (OCBC) and TAEL One Partners Ltd (TAEL One) for the proposed issue of new convertible bonds. KSE will issue S$45m in principal amount of new convertible bonds, of which OCBC will subscribe for S$30m and TAEL One the remaining S$15m. The initial conversion price is S$0.83/share, and the maturity date is three years later, on or about 21 Mar 2016.
Sufficient funds for early redemption of old convertible bonds
As at 6 Mar 2013, bondholders of KSE’s earlier issue of convertible bonds (due 2015, but early redemption Mar 2013) have tendered notices for an early redemption, within our expectations. 70% of the S$107m in principal amount of the convertible bonds are being redeemed, hence KSE will have to prepare S$76.125m in funds. This will be satisfied in the following ways: 1) S$40.9m from the rights issue, 2) S$30m from the issue of new convertible bonds and 3) S$5.2m from internal resources. OCBC and TAEL One currently hold S$28.5m and S$33.5m in principal amount of the convertible bonds due 2015, respectively.
Lowering fair value estimate to S$0.64
We have been highlighting the early redemption option of KSE’s convertible bonds and the group has finally resolved this issue. With the increase in share base due to the rights issue, we lower our fair value estimate to S$0.64 (prev. S$0.78), still based on 1.2x FY13F NTA/share. Maintain HOLD.
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