HNB lists unsubscribed shares in Rights Issue

Excessive price leads to undersubscription:

Ravi LADDUWAHETTY

Hatton National Bank has issued 4,800,000 ordinary voting shares and 4,175,700 ordinary non voting shares which have been listed in the Colombo Stock Exchange last Friday.

This is consequent to the Resolution adopted by the Hatton National Bank shareholders at the Extra Ordinary General Meeting on July 1 in relation to the remaining unsubscribed shares arising from the Rights Issue announced on June 1.

The Bank, in the Rights Issue, offered 28,740,020 ordinary voting shares and 7,013,916 ordinary non voting shares at prices of Rs. 219.50 and Rs. 119.50 respectively in the proportions of 1:10.

Following the issue of these shares, 19,020,702 ordinary voting shares and 2,838,149 ordinary non voting shares were issued and listed on August 12. The issues were undersubscribed, resulting in 9,719,318 ordinary voting shares and 4,175,767 ordinary non voting shares not been taken up . Therefore, the remaining shares which were issued and listed on Friday were to circumvent that deficit.

Top market sources told Daily News Business that the reason for the under subscription was the offer price being excessive in depressed market conditions and that the HNB share was not conducive at that time for a quick return for punters.

The results would have been positive if there was a discount provided, they said.

They also pointed out that the attraction of the HNB share was also less in terms of earnings due to heavy overheads and staff costs.