Blackstone to subscribe for US$40m zero-coupon convertible bonds, and S$7m new shares (20m sh @ $0.35/sh vs $0.32 last traded). Placement scheduled for completion approx end July and not later than 16 Sep. Bonds have maturity period of 5yrs and are convertible from 1 Jan 2012 @ $0.288/sh. Conversion price is further adjustable upward, depending on HK dual listing. Net proceeds of ~US$44m intended for use as working capital, acquisitions and potential share buy backs…
Assuming full conversion of CBs, Blackstone will become the second largest sh/h in the CAH, with ~12% stake. Vote of confidence from Blackstone is a positive, and puts a floor to CAH’s share price over the near term. Corporate governance should also improve, if Blackstone appoints a nominee to the Board. A successful dual listing in HK would be a catalyst for further re-rating in the stock, which currently trades at 9.9x fwd PE. DBS has a Buy with $0.40 target.
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