Hong Leong Bank to increase rights issue from RM1.6b to RM2.6b

      HONG LEONG BANK BHD [ ] has proposed to increase the size of the renounceable rights issue by RM1 billion from RM1.6 billion to RM2.6 billion to further strengthen its capital base and for working capital purposes.
   
     HL Bank said the issue price for the proposed enlarged rights issue, assumed to be fixed at RM7.89 which 25% below the five-day volume weighted average market price of the shares up to May 4, 2011 of RM10.52 or 21.4% discount to the theoretical ex-rights price.
    “The proposed enlarged rights issue, as compared to private placement of new equity securities, will allow all HL Bank shareholders to participate in an equity offering on a prorate basis to avoid dilution of interest and will allow all HL Bank shareholders to acquire new HL Bank shares at a discount to prevailing market prices,” it said.

(Based on an entitlement basis of two rights shares for every nine HL Bank shares held)  this would result in the issuance of up to 333.1 million rights shares and the gross proceeds would be RM2.62 billion