compoundingeffect

Instrument Category : Securities of PLC
Instrument Type : Preference Shares
Description : 106,441,367 NEW REDEEMABLE PREFERENCE SHARES IN OMESTI BERHAD
("OMESTI") ("RPS") ISSUED PURSUANT TO THE RENOUNCEABLE RIGHTS ISSUE ("RIGHTS
ISSUE OF RPS WITH WARRANTS")
Initial Listing Information :
Listing Date : 07/04/2021
Issue Date : 01/04/2021
Issue / Ask Price : Malaysian Ringgit (MYR) 1.0000
Issue Size in Unit : 106,441,367.0000
Maturity Date : 31/03/2026
Revised Maturity Date :
Name of Guarantor: Not Applicable
Name of Trustee: Not Applicable
Coupon/Profit/Interest/Payment Rate: Cumulative gross preferential dividend
rate out of the distributable profits of Omesti, at a fixed rate of 5.0% per
annum based on the issue price of RM1.00 per RPS.
Coupon/Profit/Interest/Payment Frequency: The dividends for the RPS shall be
paid every 6 months period ending 30th June and 31st December of each year,
with the first dividend payment to be paid either on 30th June or 31st
December, commencing on or after 30th June 2021, wherein the dividend rate of
5.0% per annum shall be pro-rated from the date of issuance of the RPS. The
last dividend payment shall be made on the Maturity Date.
Redemption: The Company may at its option and discretion redeem any of the RPS
on a pro-rata basis at 100% of the Issue Price at any time during the tenure of
the RPS up to the Maturity Date by giving not less than 7 business days notice
of its intention to do so.Any outstanding RPS as at the Maturity Date which
have not already been redeemed by the Company shall be mandatorily redeemed by
the Company.
Exercise/Conversion Period : 5.00 Year(s)
Revised Exercise/Conversion Period : Not Applicable
Exercise/ Strike/ Conversion Price : Malaysian Ringgit (MYR) 0.0000
Revised Exercise/ Strike/ Conversion Price :
Exercise/ Conversion Ratio : 0
Revised Exercise/ Conversion Ratio :
Mode of Satisfaction of Exercise/Conversion Price : Not Applicable
Settlement Type/ Convertible into : Cash
Remarks : This announcement is dated 6 April 2021.

2024-03-08 09:38

compoundingeffect

according to the terms sheet, nothing is exciting on the current yield, i.e. 5/0.875=5.7% p.a. You may get this type of yield in most good dividend-paying companies or REITs. The most interesting part is the redemption mode of the RCPS which stated Any outstanding RPS as at the Maturity Date which
have not already been redeemed by the Company shall be mandatorily redeemed by
the Company.Any outstanding RPS as of the Maturity Date which
have not already been redeemed by the Company shall be mandatorily redeemed by
the Company.Any outstanding RPS as at the Maturity Date which
have not already been redeemed by the Company shall be mandatorily redeemed by
the Company. That means with the current price of 0.875, RCPS shall get back RM1.00 in two years on maturity.
So, the actual YTM={(1-0.875)+0.05+0.05}/0.875=25.7% / 2= 12.85% p.a
The only risk the the risk of the company being unable to redeem the RCPS on redemption due to financial constraints.

(This serves as a academic sharing purpose and not a recommendation to buy or sell!!!)

2024-03-08 09:51

pkchong

The YTM looked very attractive but wondering how and where the company will get the $$$ needed to redeem the RPS.

2024-03-24 20:21

Sslee

Another RI of RPS to redeem the mature RPS.
It is almost like refinance to finance the retired loan.

2024-03-24 20:50

Thinkcarefully

The company may default on interest payment before maturity date

2024-06-04 19:59

Thinkcarefully

Omesti owns 28% of Microlink. The market cap of ML is 252 million as of yesterday.
28% is 70mil. I dont see any problem for Omesti to settle the interest payment of the loan stock.
I am quite confident it would also settle the principal in 2026 with another RI or sell of its holdings in ML.

1 week ago