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Sri Lanka Equity Forum » Expert Chamber » Lankem Development (LDEV) - Rights Issue and its Implications

Lankem Development (LDEV) - Rights Issue and its Implications

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Quibit

avatar
Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
First topic message reminder :

Please see below the implication of the two separate announcement made by Lankem Development (LDEV) in relation to the recent Rights Issue.

Initial Announcement
Rights Issue
22 March 2011
Date of Initial Announcement :- 09-Mar-2011
Proportion:- Fifteen (15) new ordinary shares for every One (01) share held
Issue Price:- Rs.25.00/-
The number of shares to be issued :- 103,500,000 ordinary shares
EGM / Provisional Allotment: 21.Apr.2011
XR: 25-Apr-2011
Dispatch of Provisional Letter of Allotment : 29.Apr.2011
Rights Trading Commences on : 06.May.2011
Renunciation: 13.May.2011
Last Date of Acceptance & Payment: 16.May.2011

Latest Announcement
Rights Issue
07 June 2011
Please note that 53,100,000 Ordinary Shares of the Company were listed on 7th June 2011, pursuant to a 15:1 Rights Issue.

What does this mean?
Carefully read the amounts highlighted in blue. This means that although LDEV planned to issue 103.5mn share by way of a rights issue, only 53.5mn shares were issued and subscribed. The Rights issue was a failure and not fully subscribed.

What are the Implications
a) Share capital my have not got diluted as previously expected.
b) Only few objective of rights issue would have been met. Please read the purpose of the Rights issue. http://www.cse.lk/cmt/uploadAnnounceFiles/5851299655983_446.pdf
c)LDEV may have acquired the Agrapatana Plantation from the proceeds of the rights subscription but other plans of Hydro Power and Leisure project may not materialize
d) As the subscription would have predominantly come from Lankem Group Companies, the free float will remain almost the same.
e) LDEV may be renamed as the Agarapatna Plantation and may probably be the only plantation company that may be available at these price levels

Current Share Price offer greater discount than expected. How?
Please see below the two separate calculations for the expected and adjusted theoretical ex-right price of LDEV subsequent to the Rights issue.

Expected Theoretical Ex-rights Price based on full subscription of rights.

Cum Rights Price............... 1 Share = Rs 75
Rights Proportion.............. 15: 1
Proposed Rights................15 Shares at Rs 25 = Rs 375
Ex-Rights.............................16 Shares = Rs 450
Ex-Rights Price........................ Rs 28/- per share

Real Theoretical Ex-Rights Price due to under subscription of rights

Issued Share Capital Prior to the Rights Issue. = 6.9mn Shares
Actual Rights Subscribed = 53.5mn
Actual Rights proportion = 53.5mn shares; 6.9mn shares = 7.75 shares : 1 Share
7.75 Shares@ Rs 25/= ................. Rs 194/=
Cum Rights Price...........................Rs 75/=
Cost of 8.75 shares.........................Rs 269/=
Real Ex-rights Price....................... Rs 31/=

The Market Price of LDEV as at 17th June 2011 was Rs 21/=. Therefore one may consider that LDEV trade at a larger discount to its theoretical valuations.



Last edited by Quibit on Sun Jun 19, 2011 9:02 pm; edited 1 time in total


Rajaraam


Vice President - Equity Analytics
Vice President - Equity Analytics
This was trading at Rs.90 before the right issue (when its net asset value was less than Rs.1) and now trading at 19 (when its net asset value is Rs.23). Shouldn't it be the opposite?

ranesh,
May be your facts are right. But how many shares are today selling at below NAV and below IPO price. In the current market, all those fundamental has no value.No one can predict. What happend to VONE? Not as expected by the investors.Isn't it?

sanjulanka


Manager - Equity Analytics
Manager - Equity Analytics
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sanjulanka


Manager - Equity Analytics
Manager - Equity Analytics
Very Happy Very Happy Very Happy pirat pirat pirat Basketball Basketball Basketball

sanjulanka


Manager - Equity Analytics
Manager - Equity Analytics
wait and see

hanuma


Manager - Equity Analytics
Manager - Equity Analytics
please explain why  LDEV  moving. What is the target price.

sanjulanka


Manager - Equity Analytics
Manager - Equity Analytics
https://cdn.cse.lk/cmt/upload_report_file/446_1502795974699.pdf                                        Check three month  EPS  Rs.1.97 NAV 12.59 Tea price up this period.             
my view u check careful Thanks.

sanjulanka


Manager - Equity Analytics
Manager - Equity Analytics
මිල රු. 2.90 - 3.00 අතර තිබියදි හිමිකම් නිකුතුව ගැන සිතමින් සහ ආගරපතන වැවිලි සමාගම මෙහි ප්‍රදාන අයෝජනය වග නොදැන සිටි නවක කොටස් වෙලද පොළේ අයෝජකයන්ට දැන්වත් තමන්ගේ තැරව්කරුවන්ගෙන් මිදි තම දැනුමට අනුව සමාගම් වාර්තා,ලෝක වෙළද පොළේ තේ මිළ වැඩිවීම්,ඉරාක, ඉරාන රටවල් නැවත තේ ම්ළට ගැනීමට පැමිනීම ආදි කරුණු තම දැනුමෙන් අවබෝධ වේවා!.

sanjulanka


Manager - Equity Analytics
Manager - Equity Analytics
Very Happy Very Happy Very Happy Very Happy study study study study

Tharu24 +


Stock Trader
Dear Sanjulanka,You are one of very few,who in a selfless manner initimated the huge potential available with LDEV to members.I am sure many would have capitalized.Greatly appreciate the kind acts backed by good intentions.I think all those who are following LDEV should read the post by Quibit way back in 2011,which will give valuable insight in to the true potential with the share.

sanjulanka


Manager - Equity Analytics
Manager - Equity Analytics
කොටස් වෙළද පොළේ පොඩි අයෝජකයින්ටත් ලාභ ලබන්ට පුලුවන් අවස්තාවක් ලෙස තේ වතු සමාගම්වල අයෝජනය දක්වන්න පුලුවන්.එයිනුත් හොද අනාගතයක් තියෙන සමාගම්වල අයෝජනය ඉතා වැදගත්.ස්තුතියි.

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