Posted on March 11, 2009 - by kevinscully

What to do with Chartered shares and another big rights issue for NOL?

Photo by ~yienshawn92~

The Chartered rights issue of 27:10 at 7 cents – a discount of 65.9%. Its CEO has commented that this fund raising of US$300mn was to strengthen its balance sheet, improve liquidity and boost research and development. The Wall Street Journal has a different view on the rationale of the rights and its steep discount. Its article today alludes to the fund raising as being necessary for Chartered not to breach its loan convenants of net worth of US$1bn and net leverage of not more than 180%. The market obviously didn’t like the issue with Chartered shares down 39% or 8 cents to 12.5 cents. An investor called me today and asked whether he should average down…..as he already owns the shares. I suggested that if he already had the shares – and if he wanted to average down that he should subscribe for his rights and apply for excess.

Late this afternoon, we saw weakness in NOL shares by 8.3% on rumors of a fund raising via a rights issue. As at the time of this posts – I do not see any announcement on this yet. Does anybody know or hear anything about an NOL rights issue ???

Source: NRA Capital – Kevin’s Blog

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