Renaissance plans $104m convertible bond
Dubai, February 28, 2012
Oman's Renaissance Services said on Tuesday it will ask shareholders to approve plans for a 40 million rials ($103.9 million) offering of zero coupon convertible bonds.
The approval will be sought at a shareholder meeting on March 25, the oil services firm said in a filing to the Muscat Securities Market.
Zero coupon convertible bonds are instruments which can be converted into ordinary stock in a company but while maturing at a par value are originally sold at a discount.
"Even though the capital raising plan is slightly below the 50 million rials plan disclosed during December 2011, we still see this as a positive and it gives us greater confidence that the company will undertake its capex expansion plans as expected," EFG Hermes said in a note.
"Furthermore, the successful issue of the planned convertible bonds would help improve investor confidence."
The company said in December it would raise new capital worth up to 50 million rials through the sale of a quasi-equity instrument to fund expansion. Bank Muscat was advising on the offering, it added.
Renaissance posted a 93 percent drop in annual profit for 2011 earlier this month after taking a writedown at its Topaz Marine and Engineering subsidiary and as operating expenses rose.
In August, Renaissance said it had uncovered financial misconduct and fraud at Topaz, having pulled the unit's London initial public offering in March, citing valuation concerns and growing regional unrest.
Renaissance shares rose 4.5 percent on the Muscat bourse Tuesday following the announcement. - Reuters