NIC BANK UNVEILS PRICE OF RIGHTS ISSUE SHARES

NIC Bank yesterday released the sale price for shares in its proposed rights issue, discounted by more than 50 per cent of the current price at the stock market.

“The Board of Directors of NIC Bank Limited hereby announces that in relation to the NIC Rights issue, Rights will be issued at discount price of Sh70,” a notice ran on the dailies said.

By close of trading yesterday the share price averaged Sh175. The issue, still pending approval from the Capital Market Authority and shareholders, is expected to raise at least Sh1 billion.

In what the bank termed as a move aimed at enhancing its capability to do carry out big transactions the issue is planned at a ratio of one share for every five shares held. The bank will offload 16.5 million shares in the market, boosting its core capital to Sh1.4 billion, from the current Sh412 million.

Last month, appointed professional advisors for the rights issue, naming its subsidiary, NIC Capital Limited, as the Lead Transaction Advisor, and itself as the Receiving Bank, where all the application money will be deposited pending allocation of the rights. Kestrel Capital (East Africa) was appointed the Joint Lead Stockbroker alongside Dyer & Blair Investment Bank.

In July, the bank announced a 33 per cent increase in its half-year pre-tax profit from Sh354 million to Sh471 million.

If successful the rights issue will also see the bank meet the Central Bank of Kenya’s core capital requirement of Sh1 billion by 2010. In its full results for last year, NIC Bank returned a 60 per cent growth in profits of Sh678 million against 14 per cent growth in 2005.

The additional Sh1 billion targeted through the rights issue is meant to bolster this growth. The bank will distribute retained profit through payment of dividends and share capital premiums to the current shareholders, by issuing bonus share at a ratio of two shares for every one share held.



SOURCE: DAILY NATION