The Hindu Business Line : Karnataka Bank board okays 1:5 rights issue

Mangalore, June 12 The board of directors of Karnataka Bank, which met in Bangalore on Thursday, has decided to issue one share for every five share held on rights basis at a price of Rs 100 per share.

With this, the board has decided to increase the authorised share capital of the bank from Rs 150 crore to Rs 200 crore, subject to necessary approvals.

Speaking to Business Line over telephone from Bangalore, the Chairman and Chief Executive Officer, Mr Ananthakrishna, said that the funds may be raised by the end of September. “We will not need it for June-end to meet the capital adequacy requirements. We will be raising it by the end of September,” he said.

At the end of March 31, 2008, the capital adequacy ratio of the bank stood at 12.17 per cent (11.03 per cent). The funds will be used for business development, he said.

To a query, Mr Ananthakrishna said the offer price is competitive. When his attention was drawn towards the current market conditions, he said there may be some turmoil in the market in the last four-five days.

“Most of the time, the share price was above Rs 200. The ruling rate was Rs 200 plus. The offer price is more than 50 per cent discount at that rate. The current price was due to the market turmoil in the last few days. I feel that it is more competitive rate,” he said.

The bank informed BSE that the board has decided to issue equity shares of the bank to the existing shareholders on rights basis at a price of Rs 100 per share, including the premium of Rs 90 per share, in the ratio of one equity share for every five equity shares held on the record date to be fixed in due course, subject to necessary approvals.

The board also decided to issue equity shares of the bank to the Qualified Institutional Buyers (QIBs) as per the guidelines issued by Securities and Exchange Board of India (SEBI), to raise an aggregate amount, including share premium, up to Rs 500 crore, subject to necessary approvals.