Wednesday, 19 March 2014

Uzma rights issue at big discount

Oil and gas contractor Uzma Bhd has priced its renounceable rights issue at 75 sen each, a steep discount of 76.7% to the stock’s adjusted share price to raise as much as RM99mil for expansion.

Its controlling shareholders, Datuk Kamarul Redzuan Muhamed (pic) and Datin Rozita Mat Shah, who collectively hold 67.15 million shares or a 50.87% stake in the company, have given their undertaking to fully subscribe to their alloted portions.

“The board is of the view that the price will provide shareholders an attractive opportunity to further increase their equity participation in the company at a discount to the prevailing market price of Uzma shares,” the company said in a statement to Bursa Malaysia yesterday.

At 75 sen each, the rights shares are priced at 76.7% lower than the theoretical ex-rights price of Uzma shares of RM3.22, based on the five-day volume weighted average price of the shares up to and including the last practical date of RM5.69.

The company said the discount would entice shareholders to take up their allotment.

The proposed renounceable rights issue exercise entails the issuance of up to 132 million units on a basis of one rights share for every one existing share held at date to be determined later.

Proceeds from the exercise will be used to fund the group’s existing drilling projects, oilfield operations services, investment in new technology and office renovation.

The statement said the proposed rights issue was not expected to have any material effect on the earnings of the group for the financial year ending Dec 31, 2014, as it was only expected to be completed by the fourth quarter of 2014.

“However, the earnings per share of the group will be diluted as a result of the increase in the number of Uzma shares,” it said.

Separately, on the outlook of the overview of the oil and gas industry, Uzma said it expected domestic investments to accelerate further in 2014.

“Major domestic investments will be in the oil and gas sector, including exploration and development of oil and gas fields as well as petrochemical projects,” it said, adding that Petronas allocated RM50bil for capital expenditure in 2013.

Uzma also said that in 2013, domestic investment activity was boosted by the launch of the Refinery and Petrochemical Integrated Development project in Pengerang, Johor under the Economic Transformation Plan.