Hong Leong may forgo shares sale for EON

Analysts think that HLB is sticking to its all-cash $1.59bln offer to stamp the EON deal.

Hong Leong Bank Bhd’s (HLB) proposed capital raising exercise could imply an equity element may not be on the cards as part of the settlement option for EON Capital Bhd (EON Cap) shareholders, analysts said.

OSK Research believes that uncertainty in the take-up of the equity element among minorities coupled with the proposal for a rights issue could give rise to excessive dilution.

HwangDBS Vickers Research concurred.

“Based on the announcement, we believe that HLB is sticking to its all-cash offer of RM5.06bil (RM7.30 per share). We reiterate that an all-cash offer would give EON Cap shareholders a complete exit route,” it said in a note on Monday.

AmResearch said that with the finalisation of the funding structure, HLB was unlikely to consider any equity element in its offer for EON Cap.

HLB told the stock exchange on Friday that it has proposed a renounceable rights issue to raise up to RM1.6bil. The entitlement basis and issue price of the rights have not been fixed.

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