Middlesea Insurance plc has announced it is planning a ‘rights issue’ as it called an extraordinary general meeting on November 20, in a bid to increase its authorised and issued share capital.
The unprecedented move was announced late yesterday through the Malta Stock Exchange by Middlesea Insurance plc, whereby it explained that the financial results of its Italian subsidiary, Progress Assicurazioni SpA, placed an ‘unprecedented strain’ on its capital resources.
The negative performance of its Italian subsidiary last August had caused the group to register a loss before taxation of €17.7 million for the first six months of the year.
The news is set to upset the small investors market who will have to find the money to consolidate their shareholding, while Middlesea Insurance plc will have to take stock of the current economic situation to find alternate buyers for the vacant capital if it will not be taken up.
Financial analysts explained that it would be most likely that small investors would turn their eyes to Bank of Valletta being a key shareholder in Middlesea Insurance plc, and also a co-partner in a joint-venture with the same company in Valletta Life Assurance.
“If Bank of Valletta will refinance its shareholding in Middlesea Insurance plc, then the small investor would probably follow suit, however one must see how in the present circumstances small investors would have further disposable cash to consolidate their shareholding with the company,” one analyst said.
In the statement signed by company secretary Carlo Farrugia, it was announced that resolutions are to be presented to the extraordinary meeting, including the proposal for an increase in the authorised share capital of the company to €60 million, divided into 100 million ordinary shares of a nominal value of 0.60c each.
The Board of Directors is also being authorised, for three months, to issue up to 67 million ordinary shares. The pricing and cut-off date for eligible shareholders that can participate in the rights issue are still being discussed and will be announced once they are finalised.
The new ordinary shares are expected to be admitted to listing during the last week of December. They will be ordinary shares and will rank equally with existing ordinary shares.