Warka rights mystery deepens

So far two subscription periods for Warka Bank’s ID 150 bn rights issue have come and gone without any official announcement of the results.  The last date for existing shareholders to subscribe was May 16.  As most of them did not take up their rights, there was a subsequent public offering open to everyone except those eligible to participate in the first round.  These subscribers (if any) had until July 2 to get their money in.

Apparently the chairman, who holds about 60% of the shares, did not take up his own rights, which would naturally lead you to conclude that he must have had new investors lined up to invest in the public offering.  (Otherwise what would have been the point in doing such a huge capital increase in the first place?)  But if that had been the case, it seems that there should have been an announcement by now confirming that the second round shares had been taken up and revealing the identity of the new owners.

But no such announcement has been forthcoming and it now appears that the public offering is going to a final sixty-day third round.  As the stock must be suspended until the new shares are either taken up or cancelled, this would mean that BWAI would not resume trading until some time in September at the earliest.

In the meantime, however, the Iraq Securities Commission has further complicated the process by requiring the bank to reaudit its 2009 financials.  In an announcement dated June 6 (and posted on the ISX website on June 9), the ISC claimed to have found “abnormal figures” in the accounts and requested the company to replace the auditor and redo them.

All this leaves the minority shareholder with nothing but unanswered questions:  Did the chairman actually have any investors to take up the second round shares?  Will they subscribe during the third round?  Did they ever exist in the first place?  Did the ISC’s report scare them away?  Was the timing of ISC announcement, right in the midst of a public offering, a coincidence?  What will the bank’s new auditor conclude? 

And when, if ever, will the shares resume trading?

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