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| Friday, 10 September 2004 |
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HNB goes for Rs. 2.5b Luxembourg listing and local rights issue by Irangika Range Hatton National Bank (HNB) yesterday unveiled a Rs.2.5 billion combined issue of Global Depository receipts (GDRs) to be listed on the Luxembourg Stock Exchange and a local Rights Issue. HNB is the first bank in Sri Lanka to venture into the international capital markets through a listing on a European Stock Exchange. HNB's Chairman and Managing Director Rienzie Wijetilleke said the bank has planned to implement this GDR issue from mid October this year. "The GDR issue will consist of the issue of 19.25 million voting shares at a price not lower than that offered to existing shareholders in the Rights Issue with an estimated total issue value of over Rs.1.06 billion. The Rights Issue will also consist of the offer of two new shares for every five existing shares priced at Rs.55 for voting shares and Rs.33 for non-voting shares with a total value of Rs.1.43 billion. Any voting shares that are not subscribed in the Rights Issue will be offered through the GDR issue," Wijetilleke said. "The proceeds of the GDR and Rights issues will be used to increase the Tier 1 capital of the Bank. The Bank estimates that the proceeds of the GDR and Rights issues combined with the year-end audited retained earnings will increase the Tier 1 capital of the Bank by approximately Rs. 3 billion to approximately Rs.10 billion. The capital adequacy ratio based on the risk-weighted assets as at June 30, adjusted for the equity infusion would have been 10.94 percent and 14.67 percent for Tier 1 and total capital respectively. This will position HNB to become one of the best-capitalised banks in the market well above the prudential Capital adequacy requirements of 5 percent and 10 percent for Tier 1 and Tier 11 respectively. In addition , the increase in the Bank's Tier 1 capital will allow it to further increase its Tier 11 capital in the coming years. The capital infusion will allow the banks to expand its risk-weighted assets by approximately Rs. 30 billion in the following year," Wijetilleke said. "The bank believes that the issue is fairly priced given that the voting shares are currently trading at a PER of 3.0(x) on historical earnings. The post-rights/GDR voting share capital will have a market capitalisation of over Rs. 5.8 billion based on valuation of the existing shares at current trading price and the new shares at issue price. This will place HNB among the top fifteen companies by capitalisation on the CSE. International book-building and road-shows for the GDR issue will commence shortly," he said. "Deutsche Bank AG, Colombo and Deutsche Bank Trust Company Americas have been appointed as the Custodian Bank and the Depository respectively for the GDR program. A Lead Manager has been appointed from a London based investment bank while HNB Corporate Finance Division will assist and act as the Advisor to the company. It is anticipated that a listing application will be made to the Luxembourg Stock Exchange over the next few weeks," he said. Moreover, the Bank has approved an Employee Share Ownership Scheme(ESOP) based on the non-voting shares for the executive staff of the Bank. The ESOP scheme which will be administered by a Trust will have a total initial value of Rs. 175 million. Shares for the ESOP will be taken up by the Trust either from non-voting shares that are not taken up through the Rights Issue or from the market after the Rights Issue," he said. |
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