TM International sets rights issue price

Malaysian mobile phone operator TM International yesterday announced the terms for its earlier announced M$5.25 billion ($1.4 billion) rights issue and said the portion of the deal that will not be taken up by its largest shareholder, Khazanah Internasional, will be fully underwritten by three domestic banks.

This should come as a relief to investors who have sold the stock since the initial announcement amid concerns about the scale of the transaction and the lack of a firm underwriting commitment, among other things. Only in the past three sessions has the share price managed a bit of a rebound, which sources say may be partly due to the management's reassurances about the company's current financial position and its outlook post the rights issue during the just-ended roadshow. It might also be partly due to the fact that the stock had just become too cheap.

Either way, the 20.8% bounce in the share price since last Thursday (the stock was suspended yesterday) made this the best time to fix the price since the February 26 announcement of the rights issue. However, the stock is still down 14.7% from where it traded at the time of that announcement, and that's after it had already fallen in the preceding days as the fundraising plans were leaked to the media.

The price and number of shares on offer were announced just before the start of an extraordinary general meeting yesterday morning, at which TMI's shareholders approved the share issue.

The telecom operator said shareholders will be able to buy five new shares for every four existing shares they own at a price of M$1.12 apiece. The price represents a 57% discount to Monday's closing price of M$2.61 and a 50.9% discount to the volume-weighted average price for the past five sessions.