Orascom Development plans rights issue to fund growth

Real estate and hotels firm Orascom Development said on Monday it was tapping shareholders for 185 million Swiss francs ($183 million) to speed up growth and take advantage of low construction costs.

The capital increase will be done through a discounted rights offering, the firm said in a statement. Shareholders will be offered 20 new registered shares for every 93 registered shares held at an offer price of 37 Swiss francs per share.

The firm, which uses the pre-sale of homes its main source of finance, said it would use part of the capital increase to finance projects in Switzerland, Oman, Morocco and elsewhere.

"The capital increase enables Orascom Development to accelerate its growth plans and to take advantage of currently attractive construction costs," it said in a statement.

Rights to subscribe to the capital increase will be traded on the SIX Swiss Exchange on September 22-28 and can be exercised from September 22 until noon on September 29. Delivery of the new stock is due to take place on or around October 4.

The company, which has its main base in Egypt, whose shares trade in Zurich, will issue some 4.993 million registered shares with a nominal value of 23.85 Swiss francs.

Holders of Egyptian Depositary Receipts (EDRs) in the company will be able to subscribe for the sale.

Egyptian billionaire Samih Sawiris, the company's chairman and majority shareholder, will purchase between 2.57 million and 3.0 million of the shares depending on how many are bought by EDR holders.

Credit Suisse, Deutsche Bank and UBS have fully underwritten the shares to be issued, the company said.

Orascom Development's shares traded in Zurich are down 23 per cent this year.