Business News

Tuesday, 20 June 2017

RM1.7bil Maxis placement

According to a term sheet obtained by StarBiz, the new placement shares will be priced between RM5.52 and RM5.74 per share, which would see Maxis raising between RM1.66bil and RM1.72bil cash.  This marks the first fund-raising exercise since Maxis was refloated on Bursa Malaysia in 2009.

According to a term sheet obtained by StarBiz, the new placement shares will be priced between RM5.52 and RM5.74 per share, which would see Maxis raising between RM1.66bil and RM1.72bil cash. This marks the first fund-raising exercise since Maxis was refloated on Bursa Malaysia in 2009.

PETALING JAYA: Leading telco Maxis Bhd has tapped into an exuberant local equity market to raise up to RM1.7bil in a placement exercise that has taken some investors by surprise.

Maxis shares have dipped by some 5% since June 9, wiping out some RM880mil in market capitalisation.

Yesterday, the stock was suspended from trading, after which it said it was selling 4% of its equity or 300 million shares to lower its gearing and for future spectrum purchases.

According to a term sheet obtained by StarBiz, the new placement shares will be priced between RM5.52 and RM5.74 per share, which would see Maxis raising between RM1.66bil and RM1.72bil cash.

This marks the first fund-raising exercise since Maxis was refloated on Bursa Malaysia in 2009.

Maxis’ share sale comes at a time when the local equity market is seeing some notable big deals.

Two mega-listings are planned for the second half of the year, which is expected to raise a whopping RM8bil in proceeds.

Last week, Lotte Chemical Titan Holding Bhd, a unit of South Korean multinational Lotte Chemical Corp, launched its initial public offering (IPO) prospectus looking to raise some RM6bil.

The next large IPO on Bursa Malaysia is expected to be that of Brunei’s largest lender, Bank Islam Brunei Darussalam, which reportedly wants to raise more than RM2.1bil in proceeds.

Aside from new listings, listed companies are also taking advantage to raise capital from the market.

The most recent was Malaysian Resources Corp Bhd, which has announced a proposed rights issue to raise RM2.2bil from its shareholders.

Year-to-date, the Malaysian stock market has given out one of the best returns among Asean stock markets at 9.1%, second only to the Philippines.

Foreign investors have been buying Malaysian shares, registering a year-to-date inflow of RM10.3bil, according to MIDF Research.

“The equity fund-raising exercise is expected to strengthen Maxis group’s financial position and will give us the flexibility to fund our future spectrum fees and growth strategy,” Maxis said in a statement yesterday.

An earlier analyst report had indicated that there would be upcoming spectrum auctions in 2018, including 2,600MHz, 2,300Mhz and 700Mhz in Malaysia.

Maxis said the issue price for the placement shares should be fixed at not more than a 10% discount to the five-day volume-weighted average price of the shares.

As illustration, assuming Maxis shares are at RM6.082 during the price fixing, the placement would be priced at RM5.47 per share.

As at March 31, Maxis’ total borrowings stood at RM9bil. It continues to pay out dividends to shareholders at a 3.4% yield.

Hong Leong Investment Bank Research analyst Tan J. Young said he was “neutral” on the placement exercise because the dilution impact was minimal since it was only 4% of the current share base.

“Maxis has huge borrowings. The fresh funding would not only help it reduce borrowings, but also be sufficient to fund its spectrum requirement in the future, and to grow its fibre optic segment,” he told StarBiz.

“Investing in fibre optics is very important to enhance the company’s 4G LTE quality and speed,” he added.

For the first quarter ended March 31, Maxis had 5.2 million LTE devices on its network, up from 3.2 million a year ago. The average 4G LTE usage is now at 6.5GB per month, significantly higher than the average of 2.6GB per month a year ago.

Maxis is majority controlled by T. Ananda Krishnan and counts major funds such as the Employees Provident Fund (with 9.8%) and Permodalan Nasional Bhd (8.4%) as substantial shareholders. It was unclear at the time of writing as to who is taking up the placement.

Maxis was last traded at RM5.88, commanding a price-earnings (PE) ratio of 22.11 times, while its direct competitor Digi.com Bhd was trading at 24.14 times PE.

Credit Suisse and CIMB are joint bookrunners for the proposed private placement.

Tags / Keywords: Telcos , Stocks , Earnings , Markets , Maxis , cash call

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