09 June 2011

Mah Sing Updates - 8 June 2011

Mah Sing recently announced the news on the new issues of securities.
(Source: http://announcements.bursamalaysia.com/EDMS/edmsweb.nsf/all/16B5E105F600181A482578A9003702F9/$File/Final%20salient%20terms%20and%20conditions%20of%20the%20Bonds.pdf)

Based on my calculation, Mah Sing can raise another 290M from this issue of callable convertible bond. The par value of the bond is 325M and the issue price is 89.07% from the par value. As this is 3.25% coupon 7 year bond and paid half yearly, so the Annualized Yield is around 5.13%.

As the bond can be converted to new shares, so the value of the bond can also be calculated using the market value * the conversion ratio. If we give the assumption that the conversion ratio is 1, then the value of the bond is RM0.89+RM2.09 = RM2.98.

However, as the bond holder can enjoy the 5.13% yield, it does not necessarily
convert it to shares and enjoy lower rate of dividend yield. (current dividend yield is 2.9% - 0.076/2.59)

From here, I can definitely say that Mah Sing does not have any risk of shares dilution if and only if the shares price cannot reach beyond RM3.00 and above.  Of course, we must also take note if the bond holder would like to convert into equity given the later market condition as well as the market sentiment.

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