Sky TV on home straight with $157m capital raise
Monday, 25 May 2020
Sky Television shareholders appear to have got in behind the company's deeply-discounted $157 million rights issue.
Sky's share price traded higher during most of the day on Monday, once the rights issue was adjusted for.
The company announced on Thursday that it would offer shareholders 2.83 shares for each share they owned in Sky, at an issue price of 12c per share.
Sky said on Monday that institutional investors had subscribed for more than the $119m of shares available to them, meaning Sky would not need to rely on its underwriters for that portion of the capital-raise.
The rights issue opens to retail investors on Wednesday, to raise the remaining $38m.
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Sky shares had closed at 33c prior to the announcement of the rights issue, when trading in its shares was temporary suspended.
Based on Sky's pre-rights price — and the cash raised and the share dilution that results from the rights issue — Sky shares should have valued about 17.5c when trading reopened on Monday.
But Sky shares opened at 23c and traded at an average price of 19.8c — effectively putting them at a premium to their pre-suspension price — before a late dip to 17.1c just as trading closed.
Chief executive Martin Stewart said he was delighted with the support for Sky's institutional entitlement offer and share placement.
'The level of interest was significantly higher than the available offer amount,” he said.
'The proceeds will help ensure Sky is well capitalised to withstand the impacts of Covid-19 and
positioned to execute on future growth opportunities once conditions improve.”
The rights issue has effectively eliminated concerns that Sky might struggle to redeem or refinance $100m of bonds that are due to mature in May next year.
The yield on the company bonds soared to 80 per cent in April, raising the eyebrows of analysts and prompting a query from the NZX, but has now fallen back to an unremarkable 5.5 per cent.