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Singapore Daily Bulletin – 23/11/12

CMT Share Placement Pockets $245.8m
CapitaMall Trust (CMT) will be issuing 125 million new units at $2 apiece for net proceeds of $245.8 million, following a book-building process completed on 21 November 2012. The issue price carries a discount of 5.2 percent to CMT’s closing price of $2.11 on Wednesday. The private placement which was oversubscribed drew strong institutional demands – more than 60 existing and new institutional investors from Asia, US and Europe participated in the exercise – and exceeded CMT’s minimum fund raising target of 100.5 million new units at between $1.99 and $2.07 each, for gross proceeds of at least $200 million. CMT plans to use the majority of the proceeds to support capital expenditure and asset enhancement for its properties, refinance existing debt and bolster general corporate and working capital. If CMT uses all the net proceeds to repay existing debts, its aggregate leverage could drop to 35.1 percent from 37.7 percent.

Significance: Analysts warned that though this placement would give CMT added financial flexibility in its balance sheet, the choice of raising equity in the absence of major funding needs for acquisitions and asset enhancement initiatives gives rise to dilutive effects on current shareholders.

SIA Team Up With Australian Tourism Bodies
Singapore Airlines (SIA), the island-state flagship carrier, has signed agreements worth some A$5 million with six tourism organisations in Australia to jointly fund marketing campaigns and activities to promote tourism to the different states in Australia. The marketing campaigns and activities include mounting advertising campaigns and organising familiarisation visits for travel agents and media. The agreements which are for a period of between two and four years, were penned with the South Australia Tourism Commission, Destination New South Wales, Tourism Australia, Tourism Queensland, Tourism Victoria and Destination Western Australia, covering the promotion of existing and new markets. SIA has been flying to Australia for 45 years, and now operates 108 flights a week to five Australian cities, while subsidiary SilkAir ply the Darwin route with four weekly flights.

Significance: The move is part of SIA’s strategy to further strengthen its foothold in Australia, a key market on which it has been increasingly focusing over the past year. And comes barely a year after it signed an alliance agreement with Virgin Australia for the purchase of a 10 percent stake in that carrier for A$105 million last month.

Thai Extends F&N Deadline; Awaits OUE’S Formal Offer Documents
In the four month long marathon race for control of property and beverage conglomerate Fraser and Neave (F&N), Thai tycoon Charoen Sirivadhanabhakdi yesterday held off on retaking the lead from rival bidder Overseas Union Enterprise (OUE). The consortium led by Charoen extended the deadline for its F&N general offer by three weeks, maintaining its bid at $8.88 per share as the market awaits formal offer documents for OUE’s $9.08 per share tender. Shareholders of F&N now have until 11 December 2012 to accept the offer from the Thai consortium, which comprises Charoen’s privately held TCC Assets and his listed brewer Thai Beverage. Both the Thai and OUE offers are conditional upon the respective blocs gaining majority control of F&N. The Thai consortium currently holds about 35.04 percent stake in F&N (excluding acceptances that have been validly withdrawn). While OUE bloc did not own any F&N shares before their offer announcement, it has Kirin’s support putting 15 percent of F&N’s shares on OUE’s plate.

Significance: Charoen’s decision to maintain his bid at $8.88 per share will allow him to hold off on announcing his next move until he sees the offer documents from property developer OUE. The extension will give them time to evaluate the option of responding to OUE’s offer and signals that he is willing to put up a fight and might consider a higher counter offer.