Tisco plans TSR issue to keep high dividend rate
Tisco Financial Group will issue transferable subscription rights (TSRs) for 72.9 million shares to existing shareholders at Bt24 each, below the current stock price of more than Bt53. The TSR option has been chosen instead of a dividend-payment reduction to maintain the group's high dividend rate and capital.
Chief executive officer Oranuch Apisaksirikul insisted yesterday that the group still had no need to increase capital, because accumulated profits of Bt11 billion were sufficient to serve forecast annual lending growth of 15-20 per cent for the next three years.
Even though dividend-payment reduction is an option for supporting lending growth, the group wants to maintain high dividend payments to shareholders, she said.
The board approved a dividend payment at the rate of Bt2.40 per share, for a total of Bt1.75 billion. The payment ratio is 47 per cent higher than the average of 25-30 per cent paid out in the banking industry, while the dividend yield is 5-7 per cent against the banking sector's 2-3 per cent.
To offer the option to shareholders and maintain the group's capital, the board approved the TSR issue of 72.9 million shares in the ratio of 10:1 in terms of existing shares to convertible shares.
The TSR term is up to two months after the issuing date, with the book-closing date for the right to receive convertible securities being May 7.
Oranuch said the TSR issuance meant existing shareholders would receive both a dividend and the right to excise the TSRs at the price of Bt24 apiece.
The TSR is a technical method that enables shareholders to receive the maximum benefit, while the group can secure the profits for serving future loan expansion, she added.
Current stock-market sentiment makes it a good time for issuing TSRs and easing stock price volatility, the CEO said. TSR issuance will be made after the dividend payment, which will take place on May 23.
The group will issue 72.9 million new shares at the par value of Bt10 and make Bt1.75 billion available for underwriting the TSR issuance.
Shareholders who prefer investing with Tisco can allocate their dividend for purchasing the new shares, while those who choose not to do so can excise the TSRs for trading in the stock market.
Tisco's major shareholders have informed the group that they will underwrite the remaining shares.
Oranuch said the group's Tier 1 capital would still be 9.4 per cent once the planned shares operation is completed.
Shareholders will consider the proposed solution at a meeting on April 25.
The group hopes to expand via internal growth, with annual loan growth for 2013-2015 targeted at 15-18 per cent, she said.
Outstanding loans at the end of this year are predicted to be about Bt293 billion, rising to Bt345.75 billion in 2014 and Bt408 billion in 2015.
Tier 1 capital will be increased in line with profit increases, with Tisco expecting it to come in at 9.38 per cent, 9.59 per cent and 9.95 per cent, respectively, over the three-year period.