Plunge comes after auditors raise going concern issues
By JOYCE HOOI
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YELLOW Pages' share price dived 20 per cent in trading yesterday, following news that its auditors had flagged it over going concern issues. The stock closed eight cents lower at 32.5 cents yesterday, after shedding 1.5 cents in trading on Monday.
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The company's independent auditors, PricewaterhouseCoopers, had drawn attention to its unsecured 3.98 per cent fixed rate bonds with an aggregate principal amount of $130 million that will come due on September 30, 2009.
Despite the going concern issue being raised in PwC's emphasis of matter, SIAS Research investment analyst, Koh Chin Lek is unfazed. 'The company has a healthy operating cash flow, and I don't foresee difficulties for it in negotiating a new refinancing package,' said Mr Koh.
'Also, Yellow Pages has already proposed a rights issue and has about $50 million of cash in hand. The actual amount that they might have to borrow will be low.'
Earlier this month, Yellow Pages had proposed a renounceable non-underwritten rights-cum-warrants issue of up to 395.16 million rights shares at $0.15 apiece, on the basis of five rights shares with two warrants for every two existing shares held. Each warrant would be convertible to one new share at an exercise price of $0.175.
Key shareholders Stanley Tan, Global Media Holdings and Third Avenue Global Value (Master) Fund LP had undertaken to take up their entitlements. Together, they currently hold a 51.13 per cent stake in the issued share capital of the company.
The undertakings on their own are expected to raise net proceeds of $29.9 million.
Assuming full subscription, the rights issue is expected to raise $58.9 million which will go towards repaying the bonds and the warrants will raise another $27.7 million.
CIMB Bank Berhad has been appointed the manager for the rights-cum-warrants issue.
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