Brutal stock and bond issuance may come at 4iG

On September 30, 2021, 4iG will hold an extraordinary general meeting. The company has issued another announcement in connection with the event, in which it is written that a new agenda item will be added to the agenda of the general meeting.

The General Assembly will decide on 2 important issues:

  • Authorization for a period of 2 years to increase the share capital of 4iG to a maximum of HUF 7 billion,
  • On its authorization to issue corporate bonds for a period of 2 years up to a total of HUF 400 billion.

It is important to emphasize that, according to the announcements, these are not necessarily one-step transactions, and HUF 7 billion and HUF 400 billion, respectively, set a ceiling for capital increases and bond issues.

On 31 August this year, the share capital of 4iG was HUF 1,984,158,420, ie if the company increased its share capital to HUF 7 billion, it would mean a capital increase of HUF 5,015,841,580. If this were done at a nominal value of HUF 20 per share visible in the current series, the company could issue 250.8 million new shares. Of course, 4iG can deviate from this, it can issue shares at a price higher than the nominal value, and it can also issue a new series of shares with a different nominal value.

At present, the company has 99,207,921 shares, so if we take into account the capital announcement just announced, the capital increase of HUF 5 billion at par value

the number of 4iG shares could rise to as high as 350 million shares.

And why are transactions of this volume needed? 4iG has announced a number of acquisitions in recent months:

  • At the end of March, the company announced that it would acquire DIGI, one of the dominant companies in the domestic telecommunications market, and the acquisition could be completed this fall. The acquisition of DIGI in mid-April this year was described as a starting step and not the end of the process In an interview with Portfolio, Gellért Jászai, President and CEO of 4iG, who spoke at akkpr that 4iG would make further acquisitions, would strengthen its position not only in telecommunications but also in IT, aerospace and related defense.
  • In mid-June, the announcement was received that the 4iG would expand in space telecommunications, the company and its two subsidiaries, Hungaro DigiTel and CarpathiaSat, have entered into a preliminary agreement with SpaceCom to acquire a controlling majority stake in the Israeli company. The Tel Aviv-listed SpaceCom is a satellite operator and service company with global coverage with four geosynchronous satellites, with an estimated transaction value of $ 65 million.
  • In July, 4iG announced that it had entered into a preliminary, non – binding agreement with on the acquisition of Telenor Podgorica in Montenegro, the company is the market leader in the Montenegrin mobile segment with 338,000 subscribers and sales of € 43 million in 2020.
  • On August 25, it was announced that 4iG and the Hungarian state will create a telecommunications superholding, with the transaction you can acquire a majority stake in 4iG in Antenna Hungária.
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4iG has barely moved in price over the past year and a half, despite the company reporting a number of acquisitions, the company’s major owner has also bought shares, and 4iG has also performed well in public procurement. The turning point came on August 25, when the announcement of telecommunications superholding, the exchange rate rose by nearly 76 percent in two weeks, hence the correction in recent days.

Update

As a result of the news published last night, 4iG opened again today, almost 10 percent higher, above HUF 1,000.

Cover image: Â © Gábor Szabó / Gabriel Szabo

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