Jardine Cycle & Carriage to raise USD772m for bank loan payment

The loan was for a recent 24.9% stake acquisition.

According to RHB, Jardine Cycle & Carriage has announced a one-for-nine rights issue to raise some USD772m. The rights shares is priced at S$26, which represents a discount of 28% to the last traded price of S$36 and a discount of 25.8% to the theoretical ex-rights price of S$35.05. 

Jardine Strategic, which owns a 74.34% stake in JCNC, has undertaken to take up its share of the rights shares. JCNC intends to deploy the bulk of the proceeds raised to repay bank loans taken to finance the recent acquisition of a 24.9% stake in Siam City Cement for USD615m.

Here's more from RHB:

Siam City Cement is the second largest cement manufacturer in Thailand with three cement plants and total cement production capacity of 14.5m tons per annum and also produces concrete and other building materials.

In recent years, JCNC has increased its exposure to the region, expanding from its traditional markets in Singapore and Malaysia to invest in automotive distributors in Vietnam and Myanmar.

The investment in Siam City Cement represents its maiden investment in Thailand and is made with a view to provide the group with a meaningful exposure to the Thai economy in an established sector. JCNC’s key interest is its 50.1% in Astra International, Indonesia’s largest conglomerate with diverse business lines from financial services, heavy equipment and mining, agribusiness, infrastructure and logistics.

Siam City Cement, acquired at a trailing multiple of 15x P/E, will contribute ~US$40m to JCNC’s bottomline and drive pro-forma income by some 5%. Given the attractive terms of the rights, we recommend taking up the issue