Thailand’s Big C Supercenter, an operator of hypermarkets, convenience stores and health, beauty and pharmacy stores, has raised Bt4.16 billion ($135 million) from a placement of new shares that was very well received by investors.
The deal replaces the company’s plan to raise as much as $810 million from a rights issue late last year, which was postponed when the extensive flooding that crippled Thailand for months prevented shareholders from attending an extraordinary shareholders meeting to approve the transaction. There was also some concern at the time that the deal may be too big for the market to absorb and some observers argued that the flooding may not have been the only reason for the postponement.
While this current deal is significantly smaller than the rights issue, sources said the money raised will be enough to cover the company’s funding needs for the next few years. Among other things, the company’s operating results have been stronger than expected, which has allowed it to retain more cash. Since the rights issue was scrapped the company has also refinanced part of the $1.1 billion bridge loan that it took up when it acquired Carrefour’s operations in Thailand at the end of 2010, which means its current repayment needs are a lot smaller than they were in December. According to the term sheet, the proceeds from the placement will be used to fund its capex plan and to reduce its leverage.
Since Big C’s share price is up 63% year to date — it closed at a record high yesterday — the delay in raising funds has also meant that the company was able to sell shares at a significantly higher price than what it was aiming for in December, resulting in less dilution for existing shareholders. Dilution is a key concern and one of the reasons why Big C initially preferred to do a rights issue. The placement was approved by the annual general meeting earlier this week.
The company, which is 63.2% owned by French food retailer Groupe Casino, offered to sell approximately 23.6 million new shares, or 3% of its existing share capital. The shares were marketed in a range between Bt169 and Bt179, which translated into a discount of 8.4% to 13.6% versus yesterday’s closing price of Bt195.50. The wide discount was justified by the fact that the transaction accounted for about 20 days of trading.
According to a source, the deal was was more than four times covered across the range and the price could have been fixed at the top. However, the company wanted to leave some money on the table for investors and the final price was fixed at Bt176 for a discount of 10%.
The deal, which launched at 6pm Hong Kong time and stayed open for about two hours, got a lot of traction with domestic investors, but there was also good interest from international funds, the source said, noting that Big C was able to tap into the recent trend of renewed inflows into the Thai equity market. The demand came primarily from long-only investors and the top five or six names in the order book were all long-only accounts. In all about 60 investors participated in the transaction and approximately 65% of the deal went to international accounts, another source said.
The deal came on the back of a strong first quarter earnings report early yesterday that showed an 89% gain in net profit to Bt1.78 billion ($59 million) and sparked another 2.9% jump in the share price.
Credit Suisse was the sole global coordinator for the placement and also acted as a bookrunner together with BNP Paribas, Bualuang Securities, CLSA, Deutsche Bank and Siam Commercial Bank. This was the same line-up as for the rights issue in December.
