AMID market concerns about a potential share overhang, Mapletree Investments Pte Ltd (Mapletree) - the sponsor and parent of Mapletree Logistics Trust (MapletreeLog) - yesterday declared its full backing for the trust’s rights issue.
In a move to take up all rights units, if any, not taken up by unitholders of MapletreeLog, Mapletree said it has decided to apply for excess rights units.
‘Mapletree will rank last in priority after excess rights applications from all other unitholders are allocated,’ said the sponsor.
Mapletree had last month already undertaken to subscribe in full for its 30.16 per cent rights entitlement.
The ’share overhang’ worry in the market is that in the event of the rights issue not being fully taken up, the excess rights units could end up in the hands of issue underwriters who, on disposing of the units, would cause the unit price to fall.
Mapletree’s move could address this concern because of its long-term investment approach.
The issue of the 831.1 million rights units at 73 cents each will reduce the trust’s gearing from 56.3 per cent currently to 38 per cent - addressing another major concern in the market about MapletreeLog.
Mapletree CEO Hiew Yoon Khong said in yesterday’s statement: ‘As the sponsor and natural investor in MapletreeLog, we have every confidence that the manager of MapletreeLog will continue to enhance the distribution per unit for unitholders.’
A Mapletree spokeswoman said yesterday: ‘We noted the concerns that MapletreeLog’s price was trading for a short period of time below the issue price and the concern of a price overhang. We believe the rights price of 73 cents is attractive and we are fully confident that once the rights issue is completed, MapletreeLog will have a more robust balance sheet and greater financial flexibility.’
The counter closed unchanged at 75 cents yesterday.
MapletreeLog unitholders will be offered three rights units for every four existing units held.
The trust will make an announcement next week on when subscription for the rights units opens.
Last Friday, MapletreeLog’s unitholders approved the rights issue and independent unitholders (excluding Mapletree) gave Mapletree the option to pick up excess rights units without being obliged to make a mandatory general offer for the trust.
The underwriters for the rights issue are DBS Bank, Goldman Sachs (Singapore), Macquarie Capital Securities (Singapore) and UBS Investment Bank.
Mapletree’s Mr Hiew stressed: ‘MapletreeLog is an integral component of the Mapletree group’s funds management platform . . . At the rights issue price of 73 cents, we believe this is an excellent investment opportunity. Our decision to take up all unsubscribed rights units is also a demonstration of our strong support and complete confidence in the sustained growth of MapletreeLog.
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