Shares in listed South African banking group Nedcor tumbled on the JSE Securities Exchange South Africa (JSE) on Wednesday morning on speculation that the group was to announce a rights offer, possibly as big as five billion rand, when it releases its final results on Monday.
At 10h17, Nedcor shares were 3,38% or R2,19 in the red at R62,51. Its parent company Old Mutual was down 1,03% or 12 cents at R11,50.
“There has been talk of a rights issue in the market, but seeing it in headlines has seen the share come under pressure,” a dealer commented.
According to a report in Business Day, Nedcor CE Tom Boardman is “keen to equip the group with an adequate war chest for its long-term development”.
Nedcor secured a two billion rand loan from Old Mutual last year, but this is seen by Nedcor management as inadequate and short-term, the report said.
While Nedcor is expected to report poor results, there is a view that it has prepared the market for the worst.
According to an I-Net Bridge consensus forecast, Nedcor is expected to report headline earnings per share of 646,5 cents for the year to December 31, down from 1,016 cents in 2002. Dividend per share is expected to decline to 272,5 cents per share from 515 cents per share in the prior year. – I-Net Bridge