Last week, Groupe Michelin launched an estimated 1.2 billion euro ($1.6 billion) stock offering that will remain open until the close of trading on Oct. 13, 2010. Specifically, it was "a capital increase via an offering of preferential subscription rights to existing shareholders."
(The number of shares issued and the gross amount of the offering could be increased as a result of the exercise of currently exercisable stock options and conversion of the 2017 convertible bonds, according to the company.)
Michelin gave three reasons for making the offering:
1. to finance the acceleration of Michelin’s growth, including increased annual capital expenditure, which will reach 1.6 billion euros;
2. to enhance the company’s credit rating and its access to financing; and
3. to reinforce the company’s financial flexibility.
In a press briefing following the annoucement, Bloomberg LP's Lawrence Frost reported that , Michelin Managing Partner Jean-Dominique Senard said the proceeds were needed for "fund plant investments in Indian, Brazil and China, as well as other, undisclosed plans."
Each shareholder will receive one preferential subscription right for every share it holds as of the close of trading on Sept. 29, 2010. The subscription price for the new shares has been set at 45 euros per new share (nominal value of two euros and issue premium of 43 euros ) on the basis of two new shares for 11 existing shares.
During the subscription period (Sept. 30 through Oct. 13), the preferential subscription rights will be listed and traded on the regulated market of NYSE Euronext in Paris.
Settlement and delivery of the new shares will take place on Oct. 25, 2010, and they will start trading on that date. The new shares, which will carry dividend rights as of Jan. 1, 2010 -- and will entitle their holders to any dividends declared by the company from the date of issue -- will be fully fungible with the company’s existing shares. They also will be traded under the same ISIN code as the company’s existing shares.
