UPDATE 3-Resona pulls trigger on $8 bln share offering
2 minutes ago by Thomson Reuters
* Resona to sell up to 1.3 bln new shares in Japan, overseas
* Resona to use funds to repay taxpayer for bailouts
* Shares fall 4% ahead of announcement, after Thursday surge
* Resona hasn't justified need to sell so many shares-analyst
* A positive move, at right time with market up-investor
(Updates with comments)
By Taro Fuse and Emi Emoto
TOKYO, Jan 7 (Reuters) - Resona Holdings <8308.T> said it would go ahead with a share offering to raise about $8 billion, taking advantage of the recently buoyant stock market to make progress on its repayment of government bailout funds.
Resona, which had flagged the potential share offering in early November with a shelf registration effective for one year, announced on Friday that it would sell as many as 1.3 billion new shares, confirming an earlier Reuters report.
Japan's No.4 bank will use the funds to buy back state-owned preferred shares, putting a dent in the 1.7 trillion yen ($20.4 billion) it still owes the taxpayer from bailouts in the late 1990s and in 2003, when it nearly collapsed under a mountain of bad loans.
The offering, to be launched both in Japan and overseas, will double the number of Resona's common shares and is seen as a test of investors' confidence in the bank's ability to drive new earnings growth as it weans itself from government control.
"I don't think Resona has justified the need to hurry the repayment of state money by selling this many shares," said Shinichi Ina, an analyst at Credit Suisse Securities whose target price on Resona's stock is a quarter below the current level.
Resona is launching the offering amid an upswing in Japanese stocks. The benchmark Nikkei average <.N225> hit a fresh eight-month closing high on Friday, and the banking sector has rallied by nearly a fifth in the past three months.
Resona's shares fell 4 percent to 523 yen on Friday, losing steam after a 14 percent surge the previous day on talk that a share sale was imminent, which traders said would remove a source of uncertainty weighing on the stock.
Many investors had taken short positions on Resona after the registration on Nov. 5. The stock is still down 15 percent from that date, underperforming larger rivals including Mitsubishi UFJ Financial Group <8306.T> and Mizuho Financial Group <8411.T>
"Resona's sale is happening at a right time when the market is in a upward trend," said Hiroshi Fujimoto, a fund manager at Shinkin Asset Management. "The money is necessary for the bank's future so investors see this sale as a positive one."
Resona has hired Merrill Lynch Japan Securities and Nomura Securities to underwrite the offering, which could include an overallotment of 63 million shares depdending on demand.
It would raise 680 billion yen ($8.1 billion) at Friday's closing price, though the size of the offering could fluctuate significantly depending on how the stock performs before it sets the final selling price on a day between Jan. 24 and Jan. 26. ($1=83.30 Yen) (Additional reporting by Junko Fujita, Taiga Uranaka and Yumiko Nishitani; Editing by Tim Kelly and Nathan Layne)