Hong Leong Bank to increase rights issue from RM1.6b to RM2.6b

KUALA LUMPUR: HONG LEONG BANK BHD []
has proposed to increase the size of the renounceable rights issue by
RM1 billion from RM1.6 billion to RM2.6 billion to further strengthen
its capital base and for working capital purposes.
It said on Tuesday, May 10 that with the stronger capital base, the
bank will be in a better position to take advantage of growth and market
opportunities to extend its market share and profitability.
“In addition, the proposed enlarged rights issue, as compared to
private placement of new equity securities, will allow all HL Bank
shareholders to participate in an equity offering on a prorate basis to
avoid dilution of interest and will allow all HL Bank shareholders to
acquire new HL Bank shares at a discount to prevailing market prices,”
it said.
HL Bank said the issue price for the proposed enlarged rights issue,
assumed to be fixed at RM7.89 which 25% below the five-day volume
weighted average market price of the shares up to May 4, 2011 of RM10.52
or 21.4% discount to the theoretical ex-rights price.
It said this would result in the issuance of up to 333.1 million
rights shares (based on an entitlement basis of two rights shares for
every nine HL Bank shares held) and the gross proceeds would be RM2.62
billion.
“In the case where only Hong Leong Financial Group subscribes for its
full entitlement for the rights shares, the proposed enlarged rights
issue will result in the issuance of 211.6 million rights shares and
gross proceeds of approximately RM1.669 billion,” it said.