March 12, 2015

MBT prices SRO at P73.50 / sh

Metrobank (MBT, Buy) yesterday announced that has priced its stock rights offer (SRO) at P73.50/sh. This equates to a 21.75% discount to the stock’s volume-weighted average price (VWAP) ten days before the pricing date. Eligible common shareholders will be entitled to one rights share for every 6.3045 common shares, with ex-rights date set for 13 Mar 2015 and record date on 18 Mar 2015.

The offer period will be from 23 Mar 2015 to 27 Mar 2015, with listing date on 7 Apr 2015. MBT will issue 435.371m rights shares to generated P32b in total SRO proceeds. The additional capital will be used to strengthen the bank’s capital position.

Our take: We believe that the commencement and eventual completion of the SRO will lift a key overhang for MBT. The P32b SRO will strengthen the bank’s capital position and will allow it to sustain its growth trajectory and meet stricter capital requirements that will be implemented on a staggered basis starting 2017E. As it deploys the additional capital, we expect MBT to deliver faster asset growth and higher earnings over the next two years to offset the resulting dilution from the additional share issuance. – WealthSec