NOL to offer rights issue to generate capital
Neptune Orient Lines, parent of liner carrier APL, said Monday it plans to raise nearly $1 billion by offering rights shares to existing shareholders.
NOL will offer three rights shares for every four existing shares, according to an announcement the company made to the Singapore stock exchange. A rights issue is essentially a way for the company to raise capital. Unlike a public offering of shares, the rights issue is only made available to current shareholders.
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“The rights issue is timely for the company as, during the period between Jan. 1 and May 29, the Straits Times Index has recovered by approximately 32 percent and the share price of the company has increased by approximately 37 percent,” NOL said in a statement. “The board of directors of the company believes that the rights issue will assist the company and its subsidiaries to repay its debt, strengthen the balance sheet and enhance the financial flexibility of the group and provide shareholders with the pre-emptive opportunity to subscribe for shares at a discount. The company intends to use the balance of the net proceeds for: (a) investments if opportunities arise; and/or (b) general corporate and working capital purposes; and/or (c) further repayment of debts.”
NOL, around two thirds-owned by Singapore state investor Temasek Holdings, said Temasek will subscribe to its pro-rata entitlement of 67.4 percent and could “backstop” the entire rights issue, according to a
Reuters report Monday. NOL will sell 1.1 billion shares at S$1.30 (90 cents) a share, a discount of about 15 percent to the firm’s last closing share price of S$1.53.
