NDB to raise up to Rs.6.5bn through Basel III debentures

National Development Bank PLC (NDB) last week announced plans to raise up to Rs.6.5 billion through Basel III-compliant debentures.

The bank expects to issue five-year 50 million, Basel III-compliant Tier II listed, rated, unsecured, subordinated, redeemable debentures with a non-viability conversion at a price of Rs.100 per share.

The issue will follow the issuance of further 15 million of the same debentures in the event of an oversubscription of the initial tranche.
Meanwhile, NDB said it had abandoned the plans to find a strategic investor for the remaining shares of its Rs.6.2 billion rights issue, which was undersubscribed. 

The bank said the decision was in view of the current market conditions and since no finality has been reached with a strategic investor, who was in the process of carrying out a detailed evaluation with a view to investing in the unsubscribed shares.

“The board has decided that it will cease to further pursue exploring avenues in terms of powers vested in the board under Articles 7 (v) and 7 (vi) of the Articles of Association in the respect,” NDB said in its latest market filing. 

Consequently, the bank said the allotment of shares in excess of the single shareholding restrictions imposed under the Banking Act, which was stayed in respect of some affected existing shareholders of NDB (with their consent), would not be allotted. 

Steps will be taken by NDB to return the funds retained in lieu of such unallotted shares to the respective shareholders in due course, NDB added.
On June 19, 2018, the NDB board decided to issue 59.15 million new ordinary voting shares through a rights issue, priced at Rs.105 a share, in the proportion of one new share for every three shares already held.

Although the share price was higher than the rights price at the time of the announcement of the rights issue by NDB in June, by September, when the extraordinary general meeting was held to seek the shareholder approval for the rights issue, the NDB share price had come down to slightly over the rights price of Rs.105.

As a result, certain shareholders didn’t subscribe to the rights entitled to them while some shareholders couldn’t subscribe to theirs due to the single shareholder restriction under the Banking Act.

As at September 30, 2018, approximately 60 percent of the rights had been subscribed, NDB said in its third quarter interim financial accounts for this year.