12-Jul-2012 Right Issues - CFI, CIT

sriranga · 1 12-Jul-2012 Right Issues - CFI, CIT Thu Jul 12, 2012 4:40 pm

sriranga

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COLOMBO FORT INVESTMENT PLC
Company ID: - CFI
Date of Initial Announcement: - 11.Jun.2012
Proportion: - Three (03) new ordinary shares for every Ten (10) shares held
Issue Price: - Rs. 80.00/-
Qty Offered: - 1,500,000
General Meeting / Provisional Allotment: - 30.Jul.2012
XR: - 31.Jul.2012
Dispatch of Provisional Letter of Allotment: - 07.Aug.2012
Rights Trading Commences on: - 13.Aug.2012
Renunciation: - 20.Aug.2012
Last Date of Acceptance & Payment: - 21.Aug.2012
Share Transfer Book Open

COLOMBO INVESTMENT TRUST PLC
Company ID: - CIT
Date of Initial Announcement: - 11.Jun.2012
Proportion: - Two (02) new ordinary shares for every Eleven (11) shares held
Issue Price: - Rs. 80.00/-
Qty Offered: - 1,000,000
General Meeting / Provisional Allotment: - 30.Jul.2012
XR: - 31.Jul.2012
Dispatch of Provisional Letter of Allotment: - 07.Aug.2012
Rights Trading Commences on: - 13.Aug.2012
Renunciation: - 20.Aug.2012
Last Date of Acceptance & Payment: - 21.Aug.2012
Share Transfer Book Open

Antonym · 2 Re: 12-Jul-2012 Right Issues - CFI, CIT Thu Jul 12, 2012 5:31 pm

Antonym

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Repeating one of my previous posts, for the comments of persons interested in this rights issue:

Based on current market price, I have tried to calculate a possible post-issue price and rights price. Please let me know whether there are any logical flaws in my calculations.

Colombo Investment Trust PLC
Current Market Price per share: Rs 110.00
X Number of Shares (pre-issue): 5.5 million
= Market Value of Company (pre-issue): Rs 605.00 million

+ Cash Infusion through Rights Issue: Rs 80 million

= Market Value of Company (post-issue): Rs 685.00 million
/ Number of Shares (post-issue): 6.5 million
= Assumed Market Price (post-issue): Rs 105.38
(-) Rights Issue Price: Rs 80.00
= Value of Rights: Rs 25.38

Colombo Fort Investments PLC
Current Market Price per share: Rs 100.00
X Number of Shares (pre-issue): 5.0 million
= Market Value of Company (pre-issue): Rs 500 million

+ Cash Infusion through Rights Issue: Rs 120 million

= Market Value of Company (post-issue): Rs 620 million
/ Number of Shares (post-issue): 6.5 million
= Assumed Market Price (post-issue): Rs 95.38
(-) Rights Issue Price: Rs 80
= Value of Rights: Rs 15.38

My instinct tells me that CIT & CFI will get merged at some point, and this rights issue is just a preliminary step. After the issue, each company will have 6.5 million shares.

Monster · 3 Re: 12-Jul-2012 Right Issues - CFI, CIT Wed Aug 22, 2012 12:57 pm

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Unusual volume of 190,000 at Rs 85/- sold by one of the share holder in top 20 share holder list of CFI today. There is an interest on CFLB group shares today including CFLB and YORK today.

Antonym · 4 Re: 12-Jul-2012 Right Issues - CFI, CIT Wed Aug 22, 2012 1:42 pm

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Monster wrote:Unusual volume of 190,000 at Rs 85/- sold by one of the share holder in top 20 share holder list of CFI today. There is an interest on CFLB group shares today including CFLB and YORK today.

Only 4 shareholders had that many shares: CIT, CFLB, Financial Trust Ltd & Mr G M Dhansingani.

I am guessing that this was an intra-group sale, and that CIT sold to CFLB. (As per June-12 financials, CIT did not have adequate funds to subscribe for their entire CFI rights entitlement. They must have entered into some funding arrangement with CFLB.) Mind you, that's just a guess!

In my imaginary merged entity (let's call it CFIT), each CFI shareholder would be allotted 1 CFIT share for every CFI share held. Each CIT shareholder would be allotted 1.12 CFIT shares for every CIT share held. Would this be fair to all concerned?

Last edited by Antonym on Wed Aug 22, 2012 6:29 pm; edited 1 time in total

Monster · 5 Re: 12-Jul-2012 Right Issues - CFI, CIT Wed Aug 22, 2012 3:20 pm

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Antonym wrote:

Monster wrote:Unusual volume of 190,000 at Rs 85/- sold by one of the share holder in top 20 share holder list of CFI today. There is an interest on CFLB group shares today including CFLB and YORK today.

Only 4 shareholders had that many shares: CIT, CFLB, Financial Trust Ltd & Mr G M Dhansingani.

I am guessing that this was an intra-group sale, and that CIT sold to CFLB. (As per June-12 financials, CIT did not have adequate funds to subscribe for their entire CFI rights entitlement. They must have entered into some funding arrangement with CFLB.) Mind you, that's just a guess!

You may be correct. There was another transaction on CIT. 100,000 shares were traded at 95/-. Probably CFI was the seller and CFLB was the buyer.

The Alchemist · 6 Re: 12-Jul-2012 Right Issues - CFI, CIT Wed Aug 22, 2012 3:30 pm

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Antonym wrote:

Monster wrote:Unusual volume of 190,000 at Rs 85/- sold by one of the share holder in top 20 share holder list of CFI today. There is an interest on CFLB group shares today including CFLB and YORK today.

Only 4 shareholders had that many shares: CIT, CFLB, Financial Trust Ltd & Mr G M Dhansingani.

I am guessing that this was an intra-group sale, and that CIT sold to CFLB. (As per June-12 financials, CIT did not have adequate funds to subscribe for their entire CFI rights entitlement. They must have entered into some funding arrangement with CFLB.) Mind you, that's just a guess!

It wont be a good thing for either CIT/CFI to dilute each others shares to CFLB. Minority shareholders lose out then. anyways CIT Rights 2 for 11 will give them enough cash to take their approx 35 % rights in CFI. I think last guy on list sold. i noticed he has been selling down qty for past 2 years. Your theory of Merger is interesting and makes sense. since there NAV is approximately same (they can adjust it to be equal), they can swap each others shares and make it one entity. this way this one entity will have approx 25 % of CFLB and can equity account for CFLB Profit share. based on last years CFLB Profit, this works out to approx Rs 25 EPS. Also note that Ex Rights, CIT/CFI trading less than 50 % NAV.

The Alchemist · 7 Re: 12-Jul-2012 Right Issues - CFI, CIT Wed Aug 22, 2012 3:48 pm

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@ antonym, yes you are right. shortfall for CIT in taking their CFI Rights even considering their own rights issue ! then if they dilute their respective stakes to CFLB or any other related Party at this low price, it will "smell" bad. then the question will arise why they configured the Rights in such a way that their was a shorfall.

Antonym · 8 Re: 12-Jul-2012 Right Issues - CFI, CIT Wed Aug 22, 2012 4:07 pm

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The Alchemist wrote:@ antonym, yes you are right. shortfall for CIT in taking their CFI Rights even considering their own rights issue ! then if they dilute their respective stakes to CFLB or any other related Party at this low price, it will "smell" bad. then the question will arise why they configured the Rights in such a way that their was a shorfall.

We know that CFLB had recently been pledging YORK & CIT shares with Seylan Bank "as security for Banking facilities arranged on account of a subsidiary".
These facilities may have been to enable CFI & CIT to subscribe to each other's Rights entitlements: What do you think?