Sinotel just announced on the SGX website a 1 for every 4 ordinary shares, rights issue. My question is, the last I checked, it had proposed its ADRs and had a very strong balance sheet. What is this rights issue then for, considering that it should tap ADRs or use internally generated funds?
the reasons for the rights issue were stated in their announcement today.
unfortunately, asking shareholders for more money is not going to make them happy. Shareholders will just sell their rights entitlements when the time comes.
what is interesting to note is that the major shareholders, including the chairman, are committed to cough up cash for the rights. They are in the same boat, so things dont look so bad after all.
even the CFO, lo fui chu, has pledged to put cash on the table.
At the moment, Sinotel Total Debt stands at Rmb2m, with case & equivalents of Rmb52.578m. Free cashflow generated for the first 6 months is Rmb26m. The proposed rights issues is estimated to raise $23.4m or Rmb114m. This comes after an earlier announcement that it had obtained financing of up to Rmb40m from a Chinese bank and also a 28m share placement.
In my opinion, Sinotel's move is rather unfortunate in view of the current weak market.
can anyone advice me when the deadline to sign up for the rights issue? Went down to the ATM machine this morning (Oct 12) but can't find it?
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Did i miss it already?
Last edit: 13 years 8 months ago by niadmin. Reason: shorter headline
lets see how things go.. how are Sinotel's ADR trading? hardly any news about it other than the last time, there was some US retail investor subscribing to it.
As for the reasons for the rights issue, I will still argue that the company should use internal funds since it has Rmb52m in cash and equivalents.... rights shares do not benefit shareholders in my opinion...
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