Renaissance Services SAOG (RNSS) rallied to the highest close in almost five months on investor bets the provider of services to the oil and gas industry may use money raised from a planned issue of convertible bonds to fund growth.
Shares of the Muttrah, Oman-based company surged 4.3 percent to 0.632 Omani rial, the highest since Oct. 3, at the 1 p.m. close in Muscat. The benchmark MSM30 Index (MSM30) climbed 1.1 percent to 5,810.40, the highest since Aug. 2. Renaissance was the fourth most-active stock by traded value on Oman’s measure after its board recommended issuing zero-coupon convertible bonds valued at 40 million rials ($104 million). The company will seek shareholders’ approval on March 25.
“The capital raising will give the company a much more liquid profile,” said Kanaga Sundar, head of research at Gulf Baader Capital Markets SAOC in Muscat. “They may then go ahead with a more planned strategy in terms of growth.”
Renaissance said this month full-year revenue increased 14 percent to 290 million rials, exceeding analysts’ estimates. “In 2011, we addressed a series of one-off operational challenges and we are now well-placed to move forward and progress the company’s dynamic growth strategy,” Chief Executive Officer Stephen Thomas said in a statement Feb. 15.
The company’s shares have rallied 16 percent so far this year after a 51 percent drop in 2011. Renaissance said in December it plans to raise as much as 50 million rials of additional capital through a “quasi-equity instrument.”
Seven analysts recommend investors buy shares of Renaissance, while two have a hold rating on the stock. It’s trading at 7.8 times estimated earnings, compared with 10 times for the benchmark index.
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