DBS announced today their intention to raise $4 billion of capital through a rights issue. Every two shares that a shareholder owns will entitle him to subscribe for a DBS share at a price of $5.42. This is almost a discount of 45% to the last traded price of $9.85 on 19th December 2008.
The shares trade ex-rights date will be 29th December 2008 from 9am.
With the rights issue, DBS tier 1 ratio will rise from 9.7% to 11.8%.
Temasek Holdings will be taking up its full entitlement of 27.6% of the rights issue with an agreement to subcribe up to 33.3% through a sub-underwriting agreement.
More information can be found in the press release and media presentation below:
DBS rights issue press release
3 comments
1 ping
BC says:
December 24, 2008 at 2:18 pm (UTC 8)
If DBS assert that the new funds are not for M & A, does it make sense that they will use part of that to redeem their 6.1% PS?
lioninvestor says:
December 24, 2008 at 2:42 pm (UTC 8)
It is unlikely they are going to use the money to redeem their preference shares. More to boost up their capital ratios.
Intheknow says:
December 26, 2008 at 8:52 am (UTC 8)
rights issue is almost never good news
DBS Rights Issue Offer Document says:
January 2, 2009 at 11:47 am (UTC 8)
[...] to the initial announcement of DBS on their rights issue, DBS has just released their offer document. The document will be sent to entitled DBS shareholders [...]