THE market’s reaction to Eastern and Oriental Bhd ’s (E&O) cash call is to be expected. At a time of increasing uncertainty, and when the property market is seeing a slowdown, a cash call by a property developer can be unnerving for shareholders.

In E&O’s case, the massive RM550mil cash call through a private placement and rights issue is worrying because of the dilutive impact it will have on its shareholders.

MIDF Research says upon the completion of the fund-raising exercise, the share base of E&O is expected to increase by 51% to 1.98 billion shares.

In other words, if a shareholder does not participate in the cash call, the value of his holding is likely to halve post the exercise.

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