Feb. 28 (Bloomberg) -- Renaissance Services SAOG 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 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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