Sampath Bank in discussion with investor to place undersubscribed rights

Private lender, Sampath Bank PLC last week said its directors were in discussion with a potential investor to place the undersubscribed shares of its Rs.12.1 billion rights issue.
Sampath Bank offered 89 million shares at Rs.136 each in the proportion of seven new voting shares for every 23 held.

The bank in a stock market filing on June 12th said that only 61.5 million rights (69 percent) were subscribed. 

“Further to our letter dated 12th June 2019, regarding the above, we wish to inform you that the number of shares allotted to shareholders and to be listed pursuant to the rights issue was 63, 538, 223,” Sampath Bank said in a new market filing on Friday (21st).

“The board of directors is discussing with a potential investor to place the balance undersubscribed shares of the rights issue and will make a further disclosure regarding 
the process.

“Such allocations will be made after allocating rights to shareholders who applied for entitled and additional shares in full satisfaction of their request and at the same price of Rs.137 per share…,” the bank added.

Sampath Bank also said it was unable to allot the full entitlement of shares that certain large shareholders have been entitled under the rights issues since the thresholds mandated by the Banking Act would have been exceeded by such full allocation, purely because of the under subscription.

A single shareholder can own up to 10 percent stake in a bank,  and this could go up to 15 percent or higher than that under special permission from the banking sector regulator, the Central Bank.

“The board of directors has therefore decided to inform such shareholder in writing that the bank will retain subscription funds and set with their application for rights shares and if the rights issue is not fully subscribed within a reasonable time frame, the bank will refund the excess funds due to such shareholders in accordance with the provisions of the Colombo Stock Exchange Listing Rules,” Sampath Bank said.

The rights issue was called by Sampath Bank to bolster its core capital, barely a year after it raised a similar amount in another rights issue.

Also, the call for fresh cash came roughly after two weeks it raised Rs.7 billion via a subordinated debenture issue.