Friday, December 16, 2011

Dialog advance after fixing rights share price, analysts positive

KUALA LUMPUR (Dec 16): DIALOG GROUP BHD []'s shares climbed on Friday after it fixed the price of its rights issue and warrants, drawing positive response from investors and analysts.

At 11.58am, it was up 14 sen to RM2.58 with 5.7 million shares done.

The FBM KLCI rose 2.27 points 1,466.38. The broader market was firmer, with 305 gainers to 265 losers and 279 stocks unchanged. Turnover was 899.28 million shares done valued at RM495.62 million.

Dialog, which is undertaking a cash call to raise funds for more investments in the upstream oil and gas opportunities, had on Thursday fixed the rights shares at RM1.20 each and the exercise price of the warrants at RM2.40 each.

The issue price would be a discount of about 46% to the theoretical ex-rights price of RM2.23 per share, based on the five-day volume-weighted average market price (VWAMP) up to Dec 14 of RM2.43.

As for the warrants, it said the exercise price was 8% above the theoretical ex-rights price of RM2.23 per share, based on the five-day VWAMP up to Dec 14 of RM2.43.

RHB Research Institute said on Friday it was positive about Dialog's corporate exercise involving the rights issue with warrants.

On Thursday, Dialog announced that the rights issue has been priced at RM1.20 a share for the new rights and RM2.40 a warrant.

The price of the new shares was a discount of 46.5% to the estimated theoretical ex-price of RM2.23/share (based on the five-day volume weighted average market price of Dialog up to Dec 14.

'We believe the additional discount is mainly to entice shareholders given the volatile market conditions, but the higher exercise price for the warrants suggests that the company is confident on delivering in the longer term,' it said.

RHB Research it was positive on the exercise despite the potential dilutive impact, as both projects are already secured and will propel Dialog's long-term growth prospects.

It said that Dialog remained one of its premium-play picks as it still liked the company for its long-term project visibility and sound management track record.


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