Shares & Derivatives
CitySpring Infrastructure Trust: Rights issue.
By A Singaporean Stockmarket Investor (ASSI)  •  June 30, 2011
I divested my investment in CitySpring Infrastructure Trust last year in October. At that time, the Trust was trading at 60.5c/unit. Long regarded the investment as a mistake, the divestment was premised upon the Trust's weak fundamentals and relatively low distribution yield. The Trust's last done price was 53.5c/unit today and its managers announced a rights issue to raise about $210.2 million in gross proceeds to strengthen its balance sheet. Each unitholder will be asked to buy 11 new CitySpring units for every 20 held at 39c per rights unit. This rights issue is, more or less, expected with a very weak balance sheet. I have mentioned before that rights issue to fund yield accretive purchases is good for unitholders. However, a rights issue to "strengthen balance sheet" which, basically, acknowledges a weak balance sheet in the first instance is not a good deal. They are asking for money to pay ......
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By A Singaporean Stockmarket Investor (ASSI)
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