CMA approves Crown Paints Ksh.712 million rights issue

CMA approves Crown Paints Ksh.712 million rights issue

The Capital Markets Authority (CMA) has approved Crown Paints proposed Ksh.711.8 million rights issue which will see the NSE listed firm distribute an additional 71.2 million shares.

The nod by the capital markets regulator follows the application’s compliance to Capital Markets Take Over and Mergers Regulations in relation to the intention of the company’s major shareholders who have taken up the full rights entitlements.

The rights will be issued on the basis of one new ordinary share for every one existing share at a cost of Ksh.10 per share.

Proceeds from the execution of the rights issue are expected to be deployed in firming up the company’s capital base which has been significantly dented by the ongoing COVID-19 pandemic.

Further, Crown Paints intends to use part of proceeds to facilitate the development of new products, retiring of current debt facilities and funding regional expansion.

The firm will be offering the additional shares at steep discounts with its current trading share price sitting at a higher Ksh.36 on the Nairobi Securities Exchange (NSE).

Crown Paints has 71.2 million shares listed on the NSE, meaning the company will be doubling the number of outstanding shares through the rights issue.

While the procedure will firm up the company’s capital base, the rights issue will have the effect of technically halving its share price on the NSE.

Crown Paints market capitalization will however be less dented, with the rights issue mirroring a mere stock split.

Tags:

Crown Paints

Want to send us a story? Submit on Wananchi Reporting on the Citizen Digital App or Send an email to wananchi@royalmedia.co.ke or Send an SMS to 25170 or WhatsApp on 0743570000

Leave a Comment

Comments

No comments yet.

latest stories