Sunday, May 28, 2017

Dubai: Arabtec rights traders may have refrained from subscribing to the offer on the last day, as the rights were available at a premium of 30 per cent over the current share price.

Traders who bought into the rights issue were unable to trade the rights from May 16, the second day of trading, through May 21 due to a sharp falls in the price following speculative buying on May 15, when the rights price jumped as high as 2,000 per cent. Traders may look to subscribe to rights at Dh1 to recover part or full losses booked, by hoping for a recovery in Arabtec shares. But analysts say that few traders will choose such an option, when the stock price is lower than the offer price.

The rights price was set at Dh1 with a premium of 6 fils on final day of trading. Arabtec’s share price was Dh0.743 on May 28.

The last date for allocation and refund will be on June 5, and the expected date of listing of new shares will be on June 8, under the new ratio.

Arabtec’s rights issue and capital reduction are part of a recapitalisation programme announced in February this year to turn around financial performance as the company reported Dh3.4 billion in losses for 2016. The company registered a profit in the first quarter to March.

The company will cancel over 4.6 billion of its shares effective June 21 as part of the company’s capital reduction programme. The share cancellation will reduce Arabtec’s share capital to Dh1.5 billion, distributed among 1.5 billion shares of a nominal value of Dh1 each.

Aabar Investments, who owns 36.11 per cent stake in the company and is the single largest shareholder will be underwriting the offer.

By Siddesh Suresh Mayenkar Senior Reporter

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