Companies try to entice investors to share issues
HA NOI — Facing difficulties in accessing capital, a number of listed companies have offered preferential conditions to attract investors to their additional share issues.
Agriculture Printing & Packing Co (INN) plans to issue 2.7 million shares worth an estimated US$1.3 million to existing shareholders at a ratio of 2:1. Capital raised from the issue would be invested in a $1.7 million facility being developed by APP Packaging Co Ltd in northern Hung Yen Province.
In order to lure investors, INN said it would pay interest to shareholders who buy these shares rather than shares listed on the bourse. The interest rate would be equal to the company's dividend rate, expected to be 16 per cent this year.
"This difference will give some appeal to our issue plan," INN chairman Nguyen Thanh Nam told the newspaper Dau tu Chung khoan (Securities Investment). "Instead of depositing money at banks to be paid at a fixed interest rate, shareholders participating in the issue can enjoy interest rates 5-7 per cent higher and still be entitled to receive dividends at the end of the year."
Meanwhile, INN accesses new capital at interest rates below prevailing commercial borrowing rates.
The deal was warmly received by INN shareholders, almost all of whom registered to buy the additional shares.
"INN is rapidly completing documents for submission to the State Securities Commission and, upon receiving approval, will launch the issue in the third quarter or no later than in October," Nam said.
Other companies struggling to raise capital have also decided to sell shares at below-par value.
Ceramic tile producer Viglacera Dong Trieu (DTC) has planned to issue 1.6 million shares to existing shareholders at VND10,000 a share and sell another 380,000 shares to its parent company, the Viglacera Group, at VND11,000 ($0.52) a share. However, many shareholders turned up their noses at the deal, causing DTC to negotiate with Viglacera Group to sell the shares at below the VND10,000 par value.
Food and beverage maker Thai Hoa Viet Nam Group (THV) has also sought to issue 42.2 million shares to stragetic investors at just VND6,000 per share in a bid to raise about VND1 trillion ($47.6 million). — VNS