Malawi Stock Exchange (MSE) -listed Blantyre Hotels Limited (BHL) Monday registered on the bourse bonus shares it recently issued to existing shareholders.
A bonus share is an additional share given to shareholders without additional costs and is determined by number of shares that a shareholder owns.
Recently, BHL allocated three shares to existing shareholders for every 10 shares held.
The firm also announced a share split in a bid to improve its liquidity at the stock market.
A share split is a corporate action that increases the number of a corporation’s outstanding shares by dividing each share, which in turn diminishes its price.
The share split has seen each BHL share being split into five, a development that has brought the firm’s total shares in issue to 839, 750, 705 from 129, 192 416 shares.
The share split has resulted in the firm’s share price dropping from K35 to K5.40.
BHL Board Chairperson, Vizenge Kumwenda, said the move would help in making the business’ shares competitive.
“This transaction means a lot. The effect is that the number of shares increases. So with that, we expect that investors will be able to trade the shares more than case before,” Kumwenda said.
He further said, as the share price is lowered, existing shareholders will be able to trade off their shares easily, thereby improving liquidity.
Both the MSE and commentators say the move will improve demand for the company’s shares, which have been stagnant for some time.
Ironically, on the day of the share split, there were two bidders for the company’s shares at K 4.31 and K 5.40, respectively, but with no offers made.
MSE Chief Executive Officer, John Kamanga, said the move makes the counter more attractive to investors in addition to improving liquidity on the market.
He said following the share price demystification—by issuing extra shares to the general public and splitting of the same it would make the shares easily accessible.
“With that accessibility, there will be more interest in terms of demand. What it entails is that this will lead to more transactions being traded at the MSE and the investors will realise value,” Kamanga said.
He, however, recommended an increase in number of shares available to the public which currently stands at seven percent only.
According to Kamanga, doing so would also help improve on the company’s capital base.
Transaction advisor, Nico Asset Managers Chief Executive Officer, Emmanuel Chokani, said the share split would help BHL become more competitive on the market.
“Through this process, the share price should increase to reflect the increased volume and also the liquidity that is there within the market,” Chokani said.
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