On 7th March 2016, OUE Hospitalty Trust announce an underwritten and renounceable rights issue to raise proceeds of S$238.6 million. The proceeds from the rights issue will be used to fund the acquisition of the Crowne Plaza Changi Airport Extension (CPEX).
In the press release, Mr Chong, CEO of the REIT manager mention that following the rights issue, OUE H-Trust’s gearing will be reduced from 42.0% to approximately 37.8%.
33 Rights Stapled Securities will be offered for every 100 existing stapled securities in OUE H-Trust.
The Rights Stapled Securities will be issued at S$0.54. This is a discount of approximately 29.4%, based on the closing price of S$0.765 on 7 March 2016.
Things to Note
I have never subscribe to rights before. Some personal thoughts or questions for me to find out.
- As issuance of rights usually dilute the share price, what will be the fair price after rights issue? This is similar to the recent ARA rights issue whereby the share price fell from estimate $1.17 to $1.05 after rights issue.
- How do I subscribe for the rights?
- How do I or should I subscribe for excess rights?
I have subscribed to rights issue before for OUE C Reit last year as well, so share my humble experience.
Fifth person has written a good step by step guide to subscribe to rights issue. I suggest you take up the rights allotted to yourself, using it as a chance to cost down your OUE-H trust if you have confidence in its future prospects. Here is the link: http://fifthperson.com/a-step-by-step-guide-how-to-apply-for-rights-shares-by-atm/ You will have a $2 handling charge on top of the rights being paid and your CDP statement will also show the rights being credited to your account.
Excess rights can only be bought if the rights are not fully taken up (quite unlikely).
Thanks nwstbz. The article by the Fifth Person is very useful!