GO plc and its parent company, Emirates International Telecommunications Malta Ltd, have requested Greek telecoms company Forthnet to postpone a decision on a €30 million rights issue in line with the recently agreed €90 million debt restructuring deal.
GO and Emirates International have a 41% stake in Forthnet through Forengo Ltd.
The decision had been due to be taken at an extraordinary general meeting. The meeting was called to ask shareholders to approve a number of changes to Forthnet’s share capital as well as the €30 million rights issue.
Company considers that it would be premature for the Company, through Forgendo Limited, to commit to the proposed capital increase at this stage.- GO plc
In a company statement, GO said it had evaluated Forthnet's performance this year, which performance was significantly impacted by the macro environment in Greece.
It said it was well aware of the fact that a delay in approving the said proposed increase may result in a digression from certain contractual obligations under Forthnet’s Bond Loans. While this was not expected to affect Forthnet’s ability to generate value for its shareholders, it could result in the relevant banks exercising their rights in respect of the Bond Loans, as a result of which the value of the company’s investment could in fact be negatively impacted.
"These results and developments, combined with the volatile Greek economic environment give rise to the need to evaluate further the request made by Forthnet to increase shareholders’ equity through a rights issue process. After due consideration of the current state of affairs, the company considers that it would be premature for the company, through Forgendo Limited, to commit to the proposed capital increase at this stage," GO said.
GO added that it would re-assess the situation at Forthnet and in Greece ahead of the re-scheduled EGM on January 13 and take a position whether or not to support the proposed share capital increase of Forthnet.
MSE ACTIVITY
On the local equity market, the MSE Share Index todayclosed in negative territory for the third consecutive session with another 0.9% drop to a new 27-month low of 3,057.504 points. Today’s drop was mainly due to the 2% slide in the share price of HSBC Bank Malta plc to a new 31-month low of €2.50. Only 3,600 HSBC shares changed hands today. Yesterday HSBC Malta announced the closure of six of its branches.
On the other hand, Bank of Valletta edged minimally higher to close at the €2.491 level also on low volumes of just over 1,800 shares. BOV is scheduled to hold its Annual General Meeting tomorrow. Shareholders will be asked to approve a number of resolutions including the recommended final gross dividend of €0.08 per share and the recommended 1 for 8 bonus issue.
The only other active equity during this morning’s session was International Hotel Investments with a 2.2% decline in its share price back to the €0.83 level. Only one deal of 1,085 shares was executed during this morning’s session.
On the bond market, the Rizzo Farrugia MGS Index rose by a further 0.2% today to 987.099 points as Eurozone yields dropped back to 1.92% as uncertainty over a possible solution to the prevailing Eurozone crisis dampens investor sentiment. The longest-dated MGS, i.e. the 5.2% MGS 2031, traded up to an all-time high of 102.80% on strong volumes of over €1.2 million (nominal).