Jan 19, 2011

Govt. sells rights on BMRI at discount

The government plans to place preemptive rights on PT Bank Mandiri Tbk (BMRI)'s rights issue with discount of less than 8%.
Referring to the current price of Rp5,800, then BMRI placement price discount is less than 8%, which lower than the placement price limit at Rp5,350 per share.
A fund manager who heard the information said that the government began to implement the book building from today to Friday. "The placement price indicated a discount of less than 8% and CLSA will be the joint book runner," he said.
The government aims to dispose 1.56 billion preemptive rights of Bank Mandiri's rights issue. Looking to the bottom price of Rp5,350 per share, the government will secure fresh funds of at least Rp8.35 trillion.
The net book value (BV) of Bank Mandiri as of September reached Rp1,859.88 per share. The annualized BV in 2010 reached Rp2,479.84.
If the government disposes at the lower limit of Rp5,350/saham, that price reflects the annualized net book value of 2.16x in 2010.
The bottom placement of Bank Mandiri's stock is still more expensive than the current valuation of Bank Danamon which is now set at 2.07 times (assuming an annual book value Rp2,807.01 per share in 2010).
Bank Mandiri targets to secure funds within a range of Rp9.36-Rp14.39 trillion in right issue of 2.34 billion Series B stocks or 11.14% of the total shares in February 2011. Rights issue price is set within the range of Rp4,000-Rp6,150.
For every shareholder of 8,985 previous shares they are entitled for 1,000 preemptive rights in Bank Mandiri’s right issue. Bank Mandiri shares today rebounded 3.57% to Rp5,800 after facing a previous drop of 5,18% in 4 straight days.

Disclosure: No position at the stock mentioned above.  

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