Small shareholders are raising concerns over HNB’s dithering stance on its rights issue and private placement (PP) saying they were confused and most of their share trading early this week reflected this mix up due to two confusing announcements by the bank. But HNB is defending its stand saying that it is the shareholders rights that HNB is trying to protect.
HNB, four days after deciding on a PP and a rights issue, on Tuesday said that it won’t go for the planned Rs. 3.17 billion PP but will enhance the rights issue to Rs. 14.28 billion from Rs. 11.9 billion.
“HNB got a fairly large (informal) response from the majority of the shareholders (pertaining to the PP) It’s with this overwhelming response from them that we decided to limit it to a rights issue,” a HNB source told the Business Times. He added that when such a response was received from the top shareholders, the HNB board decided to scrap the PP.
“This is why we decided not to raise money from the ‘outside’ market,” he explained. “It doesn’t augur well for them,” a retailer told the Business Times, adding that the retirement of its chairman Rienzie Wijetilleke is ‘telling on’ the HNB board as its decisions are baffling. Another shareholder agreed, saying that not sticking to one decision was imprudent.
The HNB source however said that they weren’t aware of such a great response from the shareholders when the board decided on it. “When it was informed by almost all of them that the rights will be subscribed by them, then the board decided against the rights," he said.
He added that HNB is actually trying to protect its shareholders (by not getting capital from outsiders).