First Pacific, a Hong Kong-based investment management and holding company with operations in Asia, plans to raise at least HK$3.88 billion ($500 million) from a fully underwritten rights issue. The company, which is controlled by Indonesian tycoon Anthoni Salim, has set the subscription price at a 29.6% discount to Monday’s close.
The company intends to use the proceeds to strengthen its balance sheet, to finance potential acquisitions and for general corporate purposes, it said in a filing to the Hong Kong stock exchange late Monday. HSBC is the underwriter of the rights issue.
First Pacific’s principal businesses are in telecommunications, infrastructure, consumer food products and natural resources. Its investment portfolio includes PLDT, the dominant telecommunications provider in the Philippines, and Indofood, the largest vertically integrated food company in Indonesia. It also has investments in MPIC, the Philippines’ largest infrastructure management and holding company, and in Philex, the Philippines’ largest mining company, which produces mainly gold and copper.
First Pacific will sell at least 479.4 million rights shares, or as many as 491 million depending on whether any vested share options are exercised before the record date. Existing shareholders will have the right to buy one new share for every eight existing shares, according to the filing. At the low end, the number of rights shares represents 12.5% of the company.
The subscription price has been set at HK$8.10 per rights share, which translates into a discount of 29.6% to Monday’s closing price of HK$11.50, and a discount of 27.2% to the theoretical ex-rights price of HK$11.12 based on Monday’s close.
After the announcement of the rights issue, First Pacific’s share price fell 2.4% yesterday to end at HK$11.22, remaining above the subscription price. The stock is up about 32% since the beginning of the year. The Hang Seng Index rose 1.1% yesterday, recovering some ground after a sell-off last week, but it is only up by about that same amount year-to-date.
First Pacific will start to trade ex-rights on June 7 and the record date for the rights issue will be June 13. Shareholders will be able to trade their nil-paid rights in the market between June 18 and June 25 and the subscription period will end on June 28.
Anthoni Salim, First Pacific’s chairman, is also the ultimate controlling shareholder and he and his associates currently own 44.5% of the company. They have committed to take up their entitlement in full, which will see them buy approximately 213.4 million rights shares. They will also apply for 19.16 million excess rights shares, which could result in them taking up about 48.5% of the rights offering (at the base size) and increase their combined holdings to 45% after the deal.
The company has not obtained undertakings from any other shareholders to subscribe to their entitlements. However, HSBC will underwrite the rest of the deal. If no other shareholders exercise their rights, HSBC will have to buy about $258 million worth of shares, which will account for 5.7% of the enlarged share capital.
First Pacific recorded a net profit of $830.2 million in 2012 and at the end of December it had an audited consolidated net asset value of $3.2 billion.
It is historically an acquisitive company, with a good track record for acquisitions, according to a source.
Just this March, First Pacific said it and Meralco PowerGen, a wholly owned subsidiary of Manila Electric, will buy 70% of Singapore power plant GMR Energy (Singapore) for a total of $537 million. The acquisition will bring a welcome geographic diversification to First Pacific’s investment portfolio, it said.
Elsewhere in Asia, Malaysian Airline System (MAS), the country’s national carrier, has attracted robust demand for its $1 billion rights issue.
The company said in a filing on Monday that it received valid acceptances and excess applications for a total of 18.9 billion rights shares, which represented an over-subscription of 41.5% over the total number of rights shares available.
The airline sold approximately 13.4 billion rights shares at M$0.23 each to existing shareholders at the offering ratio of four rights shares for every one existing share.
The rights shares are expected to start trading on June 5. CIMB was an adviser for the offering.
