ABC US$1.11 Billion Rights Offering: Libya Takes 70.9%

As per the announcement on the BSE today, ABC's Rights Offering was successful - the full US$1.11 billion was raised.

No surprise there.  The Libyan Central Bank underwrote the Offer.  In addition to its own entitlement under the RO of 327,738,545, it purchased an additional 376,979,361 shares - which were not taken up by other shareholders under their entitlements.

All in all the Libyan shareholders in ABC (Central Bank of Libya, LAFICO,  and LFB) purchased 70.9% of the total offer.

It would appear from that announcement that LCB took up ADIA's full 305,889,306 share entitlement plus 99.9% of the 71,180,797 offered to non founding other shareholders who are mostly retail investors.

Since ABC trades below nominal value and by Bahraini Law Rights Offerings must be at nominal value, there was little likelihood that this latter group would take up their allotments under the RO.  Why pay US$1.00 for shares trading in the market at US$0.605?

From the data presented it appears that KIA bought its full allotment of 329,534,084 shares. 

As a result

1. Libyan entities will now own roughly 48.5% of ABC versus 36.3% prior to the Rights Offering.  
2. ADIA's share will drop from 27.6% to  17.7%.   
3. KIA's shareholding remains 29.7%.

A copy of the Rights Offering Prospectus is here.  Page 12 provides details of pre RO holdings and some projections for post RO holdings - which have turned out to be essentially correct.

In terms of effective purchase price (considering the CBL's US$110,000,000 underwriting fee - to be paid from the proceeds),   the Libyan entities (considered as a group) got their 780,375,173 shares at roughly US$0.86 per share.

As noted above, ABC is currently trading at US$0.605 per share., though this is not really reflective of intrinsic value.  The BSE is not a liquid market.  Compounding that fact is that the free float on ABC was 6.4% pre Rights Offering.  So on both scores there's not much price discovery in the market.  Relatively minor transactions on either the buy or sell side can move the price dramatically.  The situation will be even worse after the Rights Offering.  The free float will drop to roughly 4.1%.

Earlier post here.