On 01/10/2014, the Egyptian Stock Exchange (EGX) listed and started trading SODIC’s 250 million rights at a par value of EGP 4 per share plus issue costs of EGP 0.06 per share. Each existing shareholder has the right to subscribe to 2.75 new shares for every underlying share. The rights issue was added to EGX database separately from the underlying shares and will run for one month till the end of 27/10/2014 trading session. We expect full participation from existing shareholders due to the substantial discount of 75% on the diluted share price of EGP 15.7.
In our last update, we valued SODIC at an adjusted price of EGP 17.19 per share, which represented a considerable upside on the company’s diluted share price of EGP 15.7 per share. Shortly after September 28, the record date for the new rights issue, SODIC’s shares reached our target price (September 30, 2014). We believe this upside potential will remain as the capital increase is expected to strengthen SODIC’s balance sheet and widen liquidity.
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SODIC Flash Note – October 2014