National Grid rights issue to raise £3.2bn
National Grid, the British gas and electricity network operator, is to raise £3.2bn in discounted rights issue to strengthen its credit rating and fund increased investment.
Source: telegraph.co.uk
Comments
Charles Buckley, Gore Browne Investment Management, 2010-05-24 16:48:11
One broker commented that "while a rights issue in itself is not a surprise, the timing is".
However, that is the nature of such announcements.
The timing probably had to await the outcome of the General Election. National Grid now knows that there is cross-party support for new sources of energy in the UK and that the company is likely to be responsible for its transmission through a more efficient network.
The company is raising £3.2bn through a deeply discounted and fully underwritten 2 for 5 issue at 335p which gives an indicative theoretical Ex-Rights share price (using last night's closing price of 620p less the 25p final dividend) of around 521p against a current price of 572p.
The company also announced full year figures which were broadly in line with market expectations and said the outlook was positive.
One area that hasn't received much comment yet is whether the company has been wise to return £4bn of capital to shareholders and raise the dividend by 62% over the last 5 years only to ask shareholders for most of this back now.
However, the business appears to be sound, the demand for its services looks assured and the financing will be successful (it is fully underwritten).