Author's Note
There was a arbitrage opportunity today. If you had wanted to buy the shares directly at say S$0.200, you could have bought the rights at S$0.035 and subscribed for the rights shares at the Rights Issue Price of S$0.159 per unit, which will then cost you a total of S$0.194 per share, a discount of S$0.006 per share. Of course you must remember to subscribe to the rights shares before the deadline on Dec 17. Note that commission has not been factored in, but you would have incurred commission charges anyway whether you are buying the shares or the rights. Big shareholders could have make use of this opportunity to sell the mother shares and buy the rights to pocket the difference in pricing. Of course the number of shares and rights transacted have to be substantial to make a significant difference.
Pro Forma Figures
With reference to the section on PRO FORMA IMPACT OF THE PROPOSED TRANSACTIONS in the CIRCULAR TO UNITHOLDERS on Nov 6, following are some of the pro forma figures:
- DPU for 1H 2010 (01 Apr 2009 to 30 Sep 2009) = 1.04 cents
- NAV per unit as at 30 Sep 2009 = $0.31
- Total Debt as at 30 Sep 2009 = $190,758,000
- Appraised value/purchase price of portfolio for 1H 2010 = $652,866,000
- Gearing as at 30 Sep 2009 = 29.0%
- Units in issue = 1,465,308,000
Base on the pro forma DPU for 1H 2010 of 1.04 cents, and NAV of $0.31, at the price of $0.194 via buying of rights and subscribing to rights shares, the pro forma yield will be about 10.7%, and at a discount of about 37.4% to the NAV.
Things to take note:
- Above figures may not hold if industrial properties continue to devalue and rental income continue to decline.
- The purchase price of 1A International Business Park (1A IBP) of S$90.0 million was agreed upon in 25 August 2007. Current valuation is S$73.0 million, according to the letter to unit holders on Nov 16.
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