The Capital Markets Authority has given financially-troubled media house, Standard Media Group, the green light to hold a rights issue. In the upcoming rights issue, the Standard Media will be looking to raise Sh1.5 billion from shareholders.
“The [Capital Markets Authority] has reviewed the documentation and information memorandum submitted in support of the application for the increase in the share capital of the company through issuance of additional rights to existing shareholders and is satisfied that adequate disclosures have been made as required under the 12th schedule to the Capital markets (Securities) – Public Offers, Listings and Disclosures- Regulations 2023,” the CMA chief executive officer Wycliffe Shamiah said.
The Standard Investment Bank is the lead transaction advisor in the rights issue.
“Consequently, in exercise of the powers conferred to the Authority by the Capital Markets Act and Regulation 16 of the Capital markets (Securities) – Public Offers, Listings and Disclosures- Regulations 2023, the authority hereby approves the rights issue and listing of additional shares in accordance with the submitted information memorandum,” Shamiah further stated in the letter that was addressed to the Standard Investment Bank.
On the Nairobi Securities Exchange (NSE), the Standard shares are currently trading at between Sh5.50 and Sh6 per share. During Friday’s intra-day trading session, the counter gained by as much as 13.82 percent to touch a high of Sh6.32 per share. The shares have a one-year high of Sh7.50 per share and a one-year low of Sh4.50 per share.
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Rights issues are an invitation to a company’s existing shareholders to buy additional new shares in the company. This is done in a fixed proportion to their existing shares. The shares issued in a rights issue are priced below the current market price to make them attractive to shareholders.
For example, if XYZ Company held a rights issue with a one for two ratio, you would receive 500 additional shares for every 1,000 shares you own if you decided to participate. If you failed to buy your additional rights, you would be risking having your stake diluted.
