Sodic considers $140m rights issue
Cairo, June 16, 2014
Sodic, Egypt's third-largest listed property developer, is considering a deeply-discounted one billion Egyptian pound ($140 million) rights issue, it said on Monday.
"The board of directors has agreed to submit a suggestion to the extraordinary general assembly to look into increasing the capital of the firm," Sodic said in a statement.
It added the firm would look to raise around one billion pounds divided over 250 million shares worth four pounds each.
That suggests a discount of about 88 percent on the current share price of around 34 pounds. Sodic did not say what it wanted the money for.
Naeem Brokerage said the move would help Sodic maintain a strong balance sheet while it prepares to acquire much needed land for future developments.
"The added liquidity should help monetize and unlock long term shareholder value through new project executions," Naeem said in a research note.
Egypt's economy has been hit by more than three years of economic and political turmoil since a popular uprising ousted autocrat Hosni Mubarak in 2011.
Last month US private equity firm Ripplewood bought a near 10 per cent stake in Sodic for 217.2 million pounds, in a sign of revived interest in Egyptian equities.
In April, the firm ended a dispute with Egypt's government, agreeing to pay 900 million pounds over seven years after a revaluation of its Eastown development project in Cairo.
Eastown is twice the size of London's 97-acre Canary Wharf business district and includes offices, shops and homes. The government had sought to revoke Sodic's rights over the land because of delays in the development.
In the property sector, demand for new housing remains strong and officials have said Egypt needs around 500,000 new units a year to satisfy the demands of its population. - Reuters