Bursa Malaysia Asks Listed Companies To Sell More Shares

On Business Times: Bursa to push firms to sell more shares

• BURSA Malaysia Bhd, operator of the nation’s exchange, said it will press publicly traded companies to sell more shares to stay in a revamped benchmark stock index, a move aimed at making the equities easier to buy and sell.
  
  “One of the biggest complaints by investors is you have very good companies, but they find it difficult to buy the shares,” Datuk Yusli Yusoff, Bursa’s chief executive officer, said in an interview in Kuala Lumpur yesterday. It will “bring a sense of competition; a lot of companies would want to be in that benchmark,” he said.
  
  The bourse is replacing the Kuala Lumpur Composite Index of 102 companies with the new 30-share FTSE Bursa Malaysia KLC on July 6. Companies in the new index will be required to have at least 15 per cent of their shares publicly available for trading, a level that will increase every six months.
  
  The government said yesterday it plans to sell more of its holdings in some of the nation’s biggest companies to help lure more foreign investment to Malaysia after the benchmark index’s 23 per cent climb this year lagged behind returns of other Southeast Asian stock markets.
  
  At least five of the nation’s 10 biggest publicly traded companies by sales, including Tenega Nasional Bhd and Petronas Dagangan Bhd, are partly owned by the government’s investment company, data compiled by Bloomberg show. -- Bloomberg

I do not quite agree.

I do think that from a business perspective, as a listed entity, Bursa Malaysia is biased towards more liquidity. More liquidity means more transactions and more transactions means more business.

Well is the lack of liquidity the main reason why investors chose not to invest in our stocks?

Would having more liquidity increase the attractiveness of our shares?

And what about the current shareholders in these companies?

If I have shares in say a stock named 'Banyak Shares Bhd' and if the company does a placement of 20% just to increase the liquidity, how would I feel? Won't this stock sale dilute my earnings per share by 20%? Would I be over the moon?

So stock sale or placement dilutes the earnings for the minorities. What about rights issue? The minority would then be given a chance to participate in such an exercise. Well, some might not like it because given the current economic conditions worldwide, not all minority shareholders will have the excess money to buy more shares!!! So would the minority shareholder be over the moon?

Some More Thoughts On AirAsia's Proposed Stock Sale

I was just wondering.

Ok, I was thinking for a moment. Hey I could be wrong hor.

Anyway as per yesterday's posting Comments On AirAsia Stock Sale

• Piggy bank cash balances now is at 223.991 million. Total loans stood at 6.934 Billion!!!!!!!

Now assuming the full 500 million raised from the stock sale is used to par down AirAsia debts, it would mean a cash balances of 223.991 million versus a reduced loans of 6.4 Billion!

Which is still incredibly high, yes?

And considering that AirAsia is going to have to take delivery of more new planes, surely this is not cutting it, yes? I mean the total debts is still going to increase a lot!

Now since AirAsia Says That "There Is A Huge Appetite For Our Shares...", I am wondering....

So how about AirAsia doing a more BIGGER stock sale?

How about a 1 for 1 rights issue?

Yeah, instead of getting new investors, why don't AirAsia current shareholders, fork out more money?

As mentioned, a 20% stock sale or placement could raise some 500million, just imagine how much a 1 for 1 rights issue could raise?

How about this?

At least this way AirAsia could really raise a whole lot of money!

And at least, it also shows how much AirAsia's own shareholders are really optimistic about AirAsia's future prospects.

Just food for thought lah.

If you don't like it, just spit it out. :D

Worldwide Blockbuster Stock Sale

Are you simply amazed with the size of all the blockbuster stock sale coming up worldwide?

In no random order... and I am sure the below list is not complete.

• State Street Corp said on May 18 it plans to sell US$1.5 billion of stock
• SunTrust plans $1.25 bln stock sale, dividend cut
• M/I Homes planning stock sale
• Lloyds £4bn fund-raising, share sale: Q&A
• Toshiba readies $5bn share and bond sale

And just completed

• MGM Mirage Shares Fall After Stock Sale Is Completed

Oh and there is the AIA's US$4 Billion IPO.

• AIG starts IPO process for Asian crown jewel

How now my dearest Brown Cow?

William Hill Joins The Mad Rush For Cash Call!

The mad rush for rights issue!

Will there be enough money?

• William Hill joins rights issue rush
  Some of Britain's biggest companies, including Liberty International, the owner of the Lakeside shopping centre, and bookmaker William Hill, will announce rights issues to raise billions of pounds within the next few weeks.
  
  By Garry White
  Last Updated: 11:25PM GMT 14 Feb 2009
  
  The accelerating rush to tap investors for capital, which will also be joined by Premier Foods, the country's biggest food producer, will underline the growing need of major corporate names to repair their balance sheets as they brace themselves for a protracted downturn.
  
  The continuing flood of rights issues will also intensify the debate about the traditional pre-emption rights of existing investors to participate in new fundraisings.
  
  Premier Foods, which owns Hovis bread and the Mr Kipling cakes range, is drawing up plans to announce a £400m rights issue alongside its results. The company is also in talks to attract a cornerstone investor that would subscribe an additional sum of new equity on preferential terms. The prospective investor is understood to be a large US private equity fund.
  
  Premier is discussing the plan with institutional shareholders, some of which have said that they do not want to see a new investor subscribe to new equity on potentially better terms than they would receive.
  
  The debate about pre-emption rights has been inflamed since Barclays decided to raise billions of pounds from a group of Middle Eastern government-backed funds last year. Under the terms of that capital-raising, the new shareholders were issued tax-deductible securities which paid a coupon of 14pc. Legal & General Investment Management (LGIM), the City's largest institutional investor, is now understood to be calling for the resignation of Marcus Agius, the chairman of Barclays, following the controversial fundraising.
  
  Rio Tinto, the debt-laden mining group, added further fuel to the ire of City institutions last week when it agreed a deal with Chinalco, the state-controlled Chinese aluminium producer. The Association of British Insurers wrote to Rio Tinto chairman Paul Skinner before the announcement was made, but to no avail.
  
  Chinalco agreed to inject $19.5bn (£13.5bn) into Rio, $7.2bn via a convertible bond issue and the rest to purchase minority stakes in nine mines. Now major shareholders are calling for the deal to be scrapped and are trying to get the company to undertake a $10bn rights issue.
  
  William Hill is understood to be plotting a rights issue to raise about £200m, to be announced later this month. The rights issue is to be fully underwritten by Citigroup, and would form part of a £1.2bn refinancing designed to steer the group through the deepening recession.
  
  Among the other companies examining raising capital is CRH, the Irish industrials group, which is understood to be examining a rights issue to raise about €1bn (£894m).
  
  The first FTSE 100 group to unveil a rights issue in 2009 was mining group Xstrata. However, this deal had its fair share of controversy too. The company did not ignore pre-emption rights, but a deal with its largest shareholder raised concerns about related-party transactions.
  
  The company announced a two-for-one rights issue raising £4.1bn. Part of the deal involved Xstrata buying a coal mine from Glencore, the Swiss commodities trader and Xstrata's largest shareholder with a 35pc stake, for $2bn.
  
  One investor called the transaction a "cheap loan to Glencore" adding that "if these were normal times, we'd vote it down and ask them to come back with a proper rights issue. But we don't have much choice."
  
  One sector where rights issues seemed inevitable was property. This has been caused by the tumbling value of commercial property and the high degree of leverage built up when the property market was soaring.
  
  First off the block was Workspace group, which provides serviced offices throughout London. The amount raised was a relatively small £87m via a five-for-one rights issue to restore its balance sheet and cut debt. Workspace was the first UK real estate investment trust (REIT) to concede such a cash call, but it was closely followed by retail property group Hammerson, which needed to shore up its balance sheet to stop it breaking banking covenants.
  
  The company, whose portfolio is dominated by shopping centres and retail parks, offered shareholders seven new shares for every five held, at a 62pc discount.
  
  Last Thursday, British Land became the latest large property company to tap investors. The company raised £740m to reduce debt but also to exploit buying opportunities as commercial property values plunge amid the economic downturn.
  
  Both Liberty International and Land Securities, the UK's largest commercial property group, are predicted to follow with fundraisings of their own.
  
  Other groups that have raised cash through rights issues in 2009 include insurers Beazley and Catlin, as well as Cookson.
  
  As the global economic turmoil continues companies are trying to be more creative in the way they raise cash. As Barclays and Rio Tinto's example shows, the route to new funds can be paved with difficulty and controversy. One thing you can be sure of, however, is that the next few weeks will see a flood of rights issues as broken balance sheets receive some major surgery.