We cut our fair value of MRCB to RM1.26 (from RM1.89), still based on a 10% discount to its RNAV, due to the dilutive effect of the rights issue and free warrants. MRCB has announced that it has fixed the issue price of its rights shares at RM0.79 per rights share, and the exercise price for its rights warrants at RM1.25 per rights warrant.
To recall, MRCB had on 17 May 2017 proposed a renounceable rights issue of up to 2.85bil new ordinary shares together with up to 570.76mil free detachable warrants, on the basis of one rights share for every one existing MRCB share (1-for-1) and one free rights warrant for every five rights shares subscribed (1-for-5). The rights issue goes ex on 5 Oct 2017.
Under the maximum scenario, the enlarged share capital will increase to 6.82bil upon the completion of the rights issue and full exercise of the rights warrants. MRCB would be able to raise in total RM2.97bil from the rights issue and exercise of warrants under the maximum scenario.
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