KS Energy

KS Energy: Recently announced that it will undertake a renounceable underwritten rights issue to raise gross proceeds of about $42.1m. The co is offering up to 111.65m new ordinary shares at an issue price of $0.41 for each rights share, on the basis of 1 rights share for every 4 existing shares. The group will also be issuing S$45m worth of new convertible bonds to OCBC and TAEL One Partners. This ensures that KSE will have sufficient funds for the early redemption of its earlier issue of convertible bonds. OCBC note that it has been highlighting the early redemption option of KSE’s convertible bonds and the group has finally resolved this issue. With the increase in share base due to the rights issue, house lower fair value estimate to $0.64 (prev. $0.78), still based on 1.2x FY13F NTA/share. Maintain HOLD.