In a major capital raising exercise to support expansion and acquisition over the next two years, SET-listed motorcycle leasing firm Group Lease Public Company Limited (GL) has decided to offer over 341.5 million units of free warrants to shareholders at the ratio of 3 shares to 1 warrant. At the exercise price of 10 baht for 1:1 conversion into shares, the company can potentially raise up to 3.4 billion baht in new proceeds to strengthen its funding base by 2015.
According to GL chairman and chief executive Mitsuji Konoshita, the expanded funding base will enable the company to mount an aggressive expansion drive over the next two years in the leasing, hire-purchase and other types of new “small credit” businesses in Thailand and neighboring countries, especially Cambodia. He projected that the company’s current total portfolio of roughly 5 billion baht will double to 10 billion baht by 2015.
“Across Southeast Asia, there are a lot of small finance companies that reach their lending limits and could not expand further,” Mr. Konoshita stated. “But we are in a strong position to raise funds to support them. So we are expanding our range of businesses to become a financial service provider as well,” he added. Aside from this, the company is also known to have been in negotiations for the possible takeover of a sizable micro-finance business in Cambodia.
The latest decision to offer the warrants to shareholders was in accordance with a Board of Directors resolution yesterday (Sept 30, 2013). The resolution, which approved the issuance of over 341.5 million new shares (at .50 baht par value) to reserve for the exercise of the new warrants, will now be tabled before an Extraordinary Shareholders Meeting for approval on November 8. The record date to determine the rights for the warrants is set for November 20 while the registration book will close the following day.
The Board meeting yesterday also approved the issuance of up to 2 billion baht worth of debentures, the proceeds from which will be used as working capital and also to finance business expansion.
GL has reported a 181.5 million baht net profit for the first half this year, up 25.6% from the same period last year. Despite the general slowdown of the Thai economy, sales in Thailand have continued to grow strongly. The current monthly motorcycle leasing of more than 9,000 units represents a 30% increase from the same period last year. Mr. Konoshita said the company is on course to reach the monthly sales target of 12,000 units by year end.
Meanwhile, GL’s operations in Cambodia are being boosted by the recently-signed cooperation agreement with Siam Kubota Corporation (SKC) whereby GL Finance (GLF), GL’s wholly owned subsidiary in Cambodia, will take over the financing for the popular brand of Kubota farm machineries.
As a result of GLF’s cautious approach on motorcycle leasing, its original target to achieve monthly sales of 2,000 units in the third quarter is now put off to the fourth quarter although the target to achieve average monthly sales of 4,000 units next year is still on track since its nation-wide network of Points of Sales (POSs) at Honda dealerships across Cambodia has now been set up and in full operation.
