Thanks all,,,, I hope to buy Perdana shares but shall buy now or buy after right issue end? I heard that the right issue will cause the share price drop, is it true????
If you hold onto your Perdana shares, for each share you get the rights to subscribe for 2 Perdana preference shares (exchangeable for ordinary share on a 1:1 basis) @ 32.5 sens each. The implications are as follow:
1) The VALUE (note: NOT the cost) of your holdings will be: (market price of Perdana ordinary shares during trading on 9th Dec to 16 Dec) + (2 x market price of rights (not yet paid for) during trading from 9th Dec to 16 Dec).
2) The market price of the Perdana shares at ex-date will be closing Market price on 4 Dec divided by three as a result of dilution. Dilution may or may not immediately be a factor of 3 since the rights are for preference shares and not for ordinary shares. But since the conversion is 1:1, the end (although not the immediate) result may be the same as a dilution by 3. It all depends on how fast is the conversion rate by the subscribers for the rights.
AS TO WHEN THE NEW PREFERENCE SHARES CAN BE CONVERTED TO ORDINARY PERDANA SHARES, SO FAR THE DATE IS NOT GIVEN IN THE INFORMATION PROVIDED BY PERDANA.
3) You will however be compensated after ex-date by the market value of the rights (not yet paid for) that will be listed and traded from 9 to 16 Dec 2019.
4) If you don't want to subscribe for the preference shares, you can sell off the rights during the trading sessions from 9 to 16 Dec 2019.
5) If you hold onto the rights, you can subscribe for the preference shares @ 32.5 sens each.
6) The preference MAY be worth more than the ordinary shares since they have priority over ordinary shares for dividends. But it all depends on the Market.
7) Since the preference shares is redeemable, the company has the option to buy back at a certain price (likely the market price).
8) So the uncertainties are as follows:
a) Market price at closing on eve of ex-date i.e. 4 Dec;
b) Market value of rights (not yet paid for or "nil paid rights) during trading from 9 to 16 Dec;
c) The immediate dilution factor; d) the conversion rate of the preference shares for the ordinary shares;
e) the date when conversion from preference to ordinary shares can begin;
f) the market price of the preference shares once listed;
g) the buy-back or redeem price of the preference share set by the company.
9) Drawbacks if hold on to shares:
a) Many imponderables;
b) have to cough more money to subscribe - for each share held, have to cough up 65 sens to subscribe;
c) energy related stocks may not remain so hot or be overtaken interest in other sectors;
d) Rights issues are basically fund-raising for Cash-strapped companies - they are asking shareholders for more money;
e) Not clear what Perdana wants the funds for. 26/11/2019 1:13 AM
. Perdana will surely follow the pattern of Dayang. After Dayang right issues, it fly today! Similarly, after Perdana right issues is over, it too will go back above 40 cents. Reasons because both have profits prospects! Good Luck!
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
Keith Han
411 posts
Posted by Keith Han > 2019-11-25 11:58 | Report Abuse
If i wan sucribe right issue, how to pay?