Growth Trend Supports Cash Issue.
29 JULY 2004.
Growth Trend Supports Cash Issue.
ABS Canterbury is enjoying a period of unprecedented growth with strong demand for financial and banking services, the chairman Mr Graham Kennedy told shareholders attending last night’s annual meeting at Ashburton.
“One of the most satisfying features for the Directors is the way in which ABS Canterbury’s financial support has been sought by so many individuals, families and businesses, both rural and urban, throughout our region.
“We have differentiated ABS Canterbury from other institutions by accenting personalised, friendly, banking services aimed at winning long-term customer loyalty,” he said.
During the year ended 31 March 2004 ABS Canterbury increased total assets by 19% from $177m to $211m. Since 2000, the asset base of the business has grown by 77% from $119m.
“To win our existing market share in a very competitive financial sector, it has been necessary to position ABS Canterbury at the front of the investment and lending markets in terms of interest rates.
“This has occurred at a time in our history when we are also compelled to remain technologically competitive
“In the current year ended 31 March 2005, ABS Canterbury intends to introduce Internet banking services. This developmental step will be internally funded.
“To reduce reliance on cash flows and enhance equity ratios, ABS Canterbury wishes to raise $3.9m, which will be applied to meeting the costs of such technological development, marketing of new products, and strengthen working capital.” Shareholders last night unanimously supported a special resolution adopting new rules that incorporate changes required by NZAX Listing Rules.
Mr Kennedy says, “The cash issue provides an opportunity for existing shareholders to increase their holdings on attractive terms, being approximately 27% below current market valuation of ABS Canterbury shares at the closing price 28 July 2004 of $3.60 and representing an 8% gross dividend yield at current dividend levels.”
“The cash issue will result in up to 1.5 million new ordinary shares being issued at $2.60 per share,” says Mr Kennedy. Shareholders are entitled to rights to the new shares on a pro-rata basis with 375 new shares for every 1,000 existing ordinary shares already held. The effective ratio is 0.375 to 1.
Rights to the new shares are renounceable by current shareholders and may be traded on the NZAX.
Shareholders are also entitled to a non-renounceable right to apply for under-subscriptions (if any), up to the level of their base entitlement. These additional shares will also be allocated on a pro rata basis. Allotment will occur on 1 October 2004. New shares will qualify for any dividends declared after 1 October 2004. The Directors expect to maintain current dividend levels on enlarged capital.
The Prospectus providing full details of the cash issue will be mailed to shareholders in late August 2004.
About ABS Canterbury:
ABS Canterbury provides financial and banking services to individuals, groups and organisations, rural and commercial businesses. It operates as a building society as distinct from being a registered bank.
The main emphasis of ABS Canterbury is on providing loans secured by first ranking mortgages over residential property, commercial property and rural property, with advances spread across a wide range of borrowers. The related funds are obtained from a large base of savings deposit and investment account clients.
ABS Canterbury currently has on issue 4 million ordinary shares and 3 million preference shares.