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7th GDR from Pakistan acquires $109 million
Amanullah Khan
Karachi–Lucky cement, one of the leading cement producing unit, has
successfully acquired US$109million through the issuance of around
15million GDRs. According to details, in terms of ordinary shares,
the total global offering comprises of 60million shares, which were
sold to institutional investors at a price of US$7.28 per GDR (Rs120
per share, 1 GDR=4 shares). The foreign investors gave a warm
response to Lucky GDR that was reflected in the over subscription of
2.5 times to the issue. This translates into 23% of the total share
capital of the company. The offering was made through a
book-building process, which started from April 27, 2008 and
concluded on May 07, 2008.
The issuance of 23% additional share capital by the company would
result in a two-fold increase in the free-float of the scrip. MSCI
has recently excluded Lucky Cement from Pakistan Index. With Lucky’s
free float now being doubled, its re-inclusion in the MSCI index
cannot be ruled out in the next rebalancing.
After the GDR, the total issued share capital of the company would
increase to 323million shares from existing 263million shares. This
would translate into 23% earnings dilution. The company issued the
GDR at a price of PRs480/GDR (US$7.28/GDR) in the international
market which represents 9% and 16% respective discounts to the last
closing price and average 30 days price at local bourses.
Pricing of the GDR was based on numbers of factors like prevalent
market price, quality of investors, price limits by the
international investors, level of oversubscription and the
perception of aftermarket performance of the GDRs. The management
considers the response of the foreign investors very much
encouraging despite the deteriorated political and economic
situation of the country. Regarding the utilization of the GDR
funds, the management indicated that the substantial portion of the
raised amount would be utilized to payoff its debt, which the
company acquired for the ongoing expansion program of line-1 with a
capacity of 4.2 thousand ton per day at its existing Karachi site.
However, regarding the expansion of second production line the
management informed that it is still in the deciding phase which
would be communicated upon finalization.
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