Ezra: CIMB thinks the dilutive rights and convertible bonds issuance by Ezra could be an indication that bankers are getting jittery over the fundamentals and debt profile of the company.
House ex-rights TP is $0.15, assuming the dilutive rights issue of an additional 2.026b shares is done. Although the proceeds of up to US$150m from the rights issue will be used to repay the $225m fixed rate notes due in Sep 15, the additional $200m convertible bonds to be issued will bring Ezra back to square one in its gearing position.
Key risks include negative operating leverage as Lewek Constellation’s depreciation of c.US$25m could wipe out at least 60% of Ezra’s earnings.
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