Senior Business Reporter
A number of ABC Holdings shareholders might decide not to follow their rights in the US$50 million rights issue if its share price trades at a discount to the rights issue price of US60c.
A discount to the rights issue would mean current shareholders have the option of buying cheaper shares from the market, and not follow their rights.
Last month. ABCH shareholders approved the fund-raising initiative to be underwritten by African Development Corporation, which holds a 23 percent stake in the banking group.
Before the approval of the rights issue ABCH share price was around US40c before closing at US60c, As of yesterday, the shares were bid at US55c.
ABCH opened the week adding US5c to US60c pushing the industrial index 0,09 percent to close at 132,08 points.
On Tuesday, the price remained at US60c while bids were at US50c.
Analysts said the price had to be maintained at the US60c levels or else some shareholders might opt to buy from the market.
The rights issue closes on July 27.
There are also great fears that the shares might trade just below US60c, given the lower bids.
ABCH opened the year trading at US95c, becoming one of the best performing financial counters on the Zimbabwe Stock Exchange.
This means ABCH has lost 36 percent since the beginning of the year.
“The share price has to maintain itself at or above US60c — anything below this figure would mean some shareholders would prefer to buy on the market,” said a dealer on the ZSE.
ABCH is based in Botswana and also listed in that country.
Major shareholders in ABCH have since pledged to support the fund-raising initiative.
Analysts added that ABCH share price is likely to track back to its opening price of US95c, buoyed by the fresh capital injection.
BancABC Zimbabwe will get about US$15 million from rights issue proceeds while Botswana will also get the same amount.
Meanwhile, stocks on the local bourse pushed up 0,61 percent to close at 132,78 points as financial group CBZH gained US2,10c to US11,20c.
Beverages maker Delta and Fidelity Life were in the positive, both inching up a cent to US66c and US14c respectively.
Seed Co was also up US0,99c to US86c, Innscor rose US0,60c to US55c and Pioneer inched up US0,50c to US7c.
But the cement manufacturer Lafarge slipped US3c to US50c.
Afre and Old Mutual retreated a cent each to trade at US5c and US165c respectively.
The mining index was flat at 75,19 points as all the four resources counters were unchanged at previous trading levels.