TUESDAY, 12.30PM
FOREST products group Sappi is to put its proposed rights issue on hold until the share price has improved, says the company.
The group’s R6,1-billion acquisition of Europe’s KNP Leykam had ”confused” the market, according to Sappi chairman Eugene van As. The market has chopped 11% off Sappi’s share price to R38,15 since the announcement of the deal. Van As said the intended share placement on global equity markets later this year will be put on hold.
The postponement of the share placement will not affect Sappi’s acquisition of KNP Leykam, because the deal has already been fully financed through shares and debt. Funds raised by the propsed equity offering will be used to reduce Sappi’s debt and complement a R1-billion sale of non-core assets. Van As said he will be surprised if Sappi places shares at below their R43,20 level prior to the acquisition.
The group is remaining tight-lipped over the size of the intended rights issue. Van As says that two domestic institutions have signalled their interest in taking up the entire batch of shares allocated to the South African market between them. He says the market confusion over the KNP Leykam acquisition mainly revolved around whether there was a discount, or interest, built into the debt portion of Sappi’s buyout of KNP Leykam.