Rights prospectus awaits SEC green light
Morgan Staney report expected on BOC
Bank of Cyprus shares roared to a fresh record close of CYP 2.55 on the CSE, while in Greece they hit another high of EUR 4.60 or CYP 2.64 as the bank’s positive profit warning for third quarter results attracted more buying.
The imminent issue of an investment report by Morgan Stanley raised further expectations that more institutionals are starting to cover BOC.
On heavy volume of CYP 1.6 mln in Cyprus and EUR 16.45 mln or CYP 9.2 mln in Greece, which amounted to 8.8% of the EUR 186 mln total volume transacted on the ASE on Tuesday, BOC shares continued tho advance, as market players brace for another strong improvement in results for the first nine months ending September 30.
Many are also eagerly awaiting the investment report by Morgan Stanley, which according to reliable sources may include a buy recommendation on BOC with a target above EUR 5. The Financial Mirror has not been able to substantiate the rumours and investors are urged to treat the information with caution.
RIGHTS HICCUP
Meanwhile, the bank is awaiting permission from the Securities and Exchange Commission regarding the prospectus filed for the forthcoming rights issue, which according to Financial Mirror sources has hit a small snag concerning non-EU citizens, especially those from the US.
According to Cyprus law, which is fully compatible with EU directives, BOC is obliged to send its prospectus to all shareholders, irrespective of nationality and domicile.
US law, on the other hand, forbids foreign companies from submitting a prospectus or invitation to solicit money from US citizens and funds, unless a separate application is made to the US authorities.
The BOC dilemma is how to conform to Cyprus and EU laws but at the same time not to break US or other non-EU laws.
The solution may emerge as early as Thursday, when the Cyprus SEC may decide to give an exemption to BOC, not to present its prospectus on the forthcoming rights to US and probably Canadian, Australian and Japanese citizens or funds.
Alternatively, the authorities here may decide to amend the Cyprus law and make it similar to the law in Greece, where there is no obligation to send a prospectus to all shareholders, but only through the share registry and an obligation on the custodians to act accordingly and inform their clients.
BOC has announced that it wants to raise CYP 110 mln from the market in the ratio of 1 right for every 6 shares held at the exercise price of CYP 1.40 per share.
Assuming that the bank receives the green-light from the SEC to proceed with the publication of its prospectus on Thursday, then according to the rules, the BOC shares will trade ex-rights a week later on October 26.
BREAKOUT
BOC’s Tuesday at CYP 2.55 is the highest since June 2001, and if the stock maintains its gains, the technical charts indicate more gains towards the next objective of CYP 2.66, the high since May ’01 and then CYP 2.75, the previous high since April 2001.
The 3.6% advance yesterday to CYP 2.55 took the weekly gains of BOC to 7.5% while since the start of this year, the share is up 70%. The BOC gains also helped the CSE GENX to a new high of 103.38 on Tuesday, for a daily gain of 2.74%, bringing its year-to-date gains to 42.5%.
The CSE Main/Parallel index was 2.99% stronger at 1563.86, its highest since inception a year ago, taking its year-to-date gains to 54.5%. The shares of Laiki Bank also gained to a fresh closing high of CYP 1.70, bringing its year-to-date gains to 50%. Hellenic Bank followed its peers, gaining 1.85% on the day to 55 cents, with the shares up 47% since the start of the year. Total volume on the CSE on Tuesday amounted to CYP 2.7 mln.
