Published March 14, 2009

CapitaLand's rights issue over-subscribed

By UMA SHANKARI

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SINGAPORE'S largest property company CapitaLand yesterday said that its $1.84 billion rights issue has been over-subscribed based on initial tallies done at the close of the rights offer on March 12.

'Acceptances and excess applications have been received for more than the total number of rights shares offered pursuant to the rights issue,' the developer said. The company did not provide details of the amount of the oversubscription.

The news sent the developer's shares up 16 cents, or 8.2 per cent, to close at $2.12 yesterday.

CapitaLand on Feb 9 announced a 1-for-2 rights issue to build up its war chest to $6 billion, from $4.2 billion previously. The issue was priced at $1.30 a share.

CapitaLand said then that the 'pre-emptive' rights issue will allow it to better pursue mergers and acquisitions, and investment opportunities that may arise. The company also added that it had a number of proposals on the table that it was studying.

Kim Eng analyst Wilson Liew yesterday issued a fresh 'buy' call on CapitaLand with a target price of $2.70, citing the stock's attractive valuations.

'Following the rights issue, CapitaLand is well ahead of its peers in terms of its cash horde of $6 billion ($5.3 billion if it takes up 60 per cent of CapitaMall Trust's rights issue). It also has access to another $3 billion via undrawn short-term debt facilities and the unused portion of its Medium Term Note Programme,' Mr Liew said. 'We believe that the management would be looking for distressed assets mainly in China.'

CapitaLand's retail trust CapitaMall Trust (CMT) also announced a $1.23 billion rights offer on Feb 9. CapitaLand has agreed to subscribe for up to 60 per cent of the total size of CMT's rights issue, including its rights entitlement based on its current 29.7 per cent stake.

DMG & Partners Securities analyst Brandon Lee also issued a fresh 'buy' call on CapitaLand with a $2.60 target price yesterday. 'Given our subdued outlook on the residential space, we prefer less residential-centric and well-capitalised developers like CapitaLand,' he said.

CapitaLand's rights shares are expected to start trading from March 23 and analysts expect that the share price - which took a beating in anticipation of the rights shares - should stabilise soon. CMT's rights issue closes on March 25.