The share price of Energy Absolute fell 23% to THB4.04 per share in the morning session on Friday due to a dilution effect from the right offering aiming to raise 7,400 million baht to pay off its debt.
Kasikorn Securities has stated that buyers of Energy Absolute Public Company Limited (SET: EA) from today onward will not be entitled to any rights declared by the company during that period as per the XA symbol on the company. This follows EA’s December 2nd announcement regarding a rights offering (RO) of 3,713 million new ordinary shares, effectively a 1-for-1 additional share issuance at 2 baht per share.
Shareholders subscribing to the RO will also receive EA warrants in a ratio of 3 RO shares to 1 EA warrant, which are exercisable at THB4.00 per share and have a validity of three years. The rights offering will take place between December 17, 2024, and January 3, 2025. If fully subscribed, the move aims to raise 7,400 million baht, 90% of which would be allocated towards debt repayment and maturing debentures.
The application of the XA tag is expected to reduce EA’s share price by around 31%, while earnings per share (EPS) could decline by 50%-57%, contingent on the warrants’ exercise.
Financially, EA recorded liabilities or interest-bearing debt of approximately 60,000 million baht in Q3 2024. Of this, 7,700 million baht consists of loans maturing within the next year, and 7,400 million baht comprises debentures due in 2025, totaling 15,000 million baht. Should EA successfully raise 7,400 million baht, alongside operating cash flow expected to be about 7,000-8,000 million baht next year and cash reserves of around 300 million baht, it should alleviate liquidity concerns for 2025.
Meanwhile, Kasikorn Securities has revised its target price for EA down to THB3.80, reflecting the dilution effect from right offering and revised profit estimates. Challenges remain with the impending expiration of solar energy adders and EA’s currently loss-making electric vehicle business.
