Union Bank sets SRO entitlement ratio at 0.11:1

Union Bank [UBP 39.80, up 3.4%; 77% avgVol] [link] set the price of its stock rights offering (SRO) at P30.57/share, and set the entitlement ratio at 1 rights share for every 9.1382 UBP shares owned, or (roughly) 0.11 new shares for every existing share. UBP plans to sell 327,118,089 UBP shares through this offering to raise P10 billion.

MB bottom-line: That price is way below the P33.73 to P38.23 range that UBP provided last week. The market price of UBP’s shares has fallen considerably since mid-April’s P45/share level when this plan was being put together. That really appears to have dragged the resulting SRO price down when the price formula was applied, which calls for a 25% discount from the 15-day volume weighted average price prior to May 2. It just so happened that UBP hit a three-year low on April 30th on heavy volume, so there you go. 

---

Merkado Barkada is a free daily newsletter on the PSE, investing and business in the Philippines. You can subscribe to the newsletter or follow on Twitter to receive the full daily updates.