REN will have a 250 million euros' capital increase. Each new share will cost 1.877 euros, a 25% discount in comparison to last Friday's closing price. Shareholders will assure around 30% of the rise.
REN will increase its capital by 250 million euros, setting each new share at a subscription price of 1.877 euros, which represents a 25% discount in comparison to last Friday’s closing price. Around 30% of this increase is assured by shareholders, stated the Portuguese electricity network manager. The operation will finance the purchase of EDP Gás.
“The subscription price was set at € 1.877 per share. The subscription price represents a discount of approximately 25.0% to the theoretical ex-rights price based on the closing price of REN shares on Euronext Lisbon on 10 November 2017″, stated the company headed by Rodrigo Costa in a press release sent to the market.
REN hopes to begin this Rights Offering “as soon as practicable”, which will hapen after the Portuguese Securities and Exchange Commission (CMVM) approves of the prospect and publishes a notice for the exercise of subscription rights.
The company stated that it received irrevocable undertakings from several major shareholders, representing in total “approximately 30% of the present share capital of REN, informing they will exercise their preferential subscription rights”. Among REN’s largest shareholders stands the Chinese company State Grid (25%) and Oman Oil (15%).
If the capital increase isn’t totally subscribed by shareholders, the success of the operation is assured by the investment banks with which REN had an underwriting contract. They are Santander, CaixaBI and JPMorgan, which “have agreed to procure subscribers for, or failing which to subscribe for, up to the total remaining offered shares in the Rights Offering”.
The bank Haitong did the math on the theoretical price of REN’s shares after the capital increase will be 2.5 euros, and so “the offered price is a 25% discount and the rights have a theoretical value of 0.63 euros per share”. It considers it has a neutral impact in the security, but the fact that 70% of the increase is not yet assured by shareholders “might put some short term overhang on the shares”.
The earnings from the operation will finance the acquisition of EDP Gás, a deal assessed in 530 million euros.