October 6, 2018 (LBO) – Colombo Stock Exchange listed National Development Bank (NDB) has obtained board approval to sell shares unsubscribed for in their rights issue to new investors at the rights issue price of Rs105/share.
Undersubscription of the rights issue is expected as the share price was trading slightly below the price of the rights offering. The final day for subscription was October 4th.
Analysts say that having board approval alone for the issue of shares in this circumstance is unorthodox, and usually these types of offerings are approved by a shareholder vote. As the proposed offering entails dilution of existing shareholders, using board approval alone may ignite controversy.
The rights issue was offered an attractive price of close to 50% of net asset value, however due to the poor performance of Sri Lanka’s stock market, the shares were not taken up aggressively by existing investors. The broader market indices, the ASPI and S&P SL 20 are down close to 10% and 20% respectively.