Advance Synergy Capital Berhad

Privatisation of ASC is coming to an end. It has cost Advance Synergy Berhad (ASB) around RM28 million to privatise.

ASB announced that they have received a call option from ACE Insurance to offer to buy their share in ACE Synergy Berhad (49% owned by ASC) for a cash consideration of RM117 million.

RM28 million vs RM117 million

A coincidence?

A year long planning?

Poor minority shareholders of ASC, after surrender their share at RM0.60 per share (NA of ASC was reported to be around RM2 per share) to ASB and realised that they've got a ride from major shareholder - ASB.

So, this is the game of capital. Minority shareholders? watch out!

IOI Properties Berhad

What are the benefits for one to hold on to an unlisted company's share, in this case, IOI Properties Berhad?

1. Holding period more than 5 years, in anticipation of dividends and potential exit offer from IOI Corp?
2. Upstreaming of dividends from IOI Prop may not be visible in next two years, but it's still possible in subsequent years.
   
3. Offer price of RM2.598, if compounding at 10% per annum, it will be RM4.18 per share 5 years later.
4. Can IOI Prop survive by then, after impairment of Sentosa Clove Project?
5. Will Singapore and Malaysia economy recover and reach the price recorded in 1st half of 2008 by then?

If the answers are 'yes', why not wait for IOI Prop to recover and a really good exit offer from IOI Corp?

Rights issue of TM International Berhad

Maybank rights issue go-ex today. The theoretical price is RM3.66. Closing price is RM3.86, up RM0.20. The total market capitalization increased by RM7.4Bil from RM19.9Bil to RM27.320Bil, which is RM1.4 Bil more than the total proceeds to be raised from the rights issue.

What can one learn from this rights issue?

1. Rights issue in the short run increase the market capitalisation of the Company?
2. PNB and EPF are the main underwriter for Maybank rights issue. Assuming other shareholders do not take up the rights, PNB and EPF are basically underwrite the impending impairment of BII

So, what will happen to TM International (or Axiata) share price? Rights issue of TMI shall goes ex on 8 April 2009.

Can one also assume the same happen to TMI, which see TMI market capitalization increase higher? (translating to higher share price)

Maybank rights issue are 9-for-20; TMI rights issue are 5-for-4. Ratio wise, share capital of TMI will more than double compared to Maybank 45% increase.

TMI share price closed at RM2.26 and it has a market capitalization of RM8.48Bil as at 31 March 2008. After the rights issue, the number of paid-up share capital of TMI shall increase to 8.44Bil from 3.75Bil. Assuming the market capitalisation of TMI stays the same after ex, the share price of TMI should hover around RM1 per share. It can't be. TMI is expected to raise a total RM5.25Bil. If everything stays the same, TMI shall have a market capitalization of RM13.73Bil (RM8.48Bil + RM5.25Bil) and translating to RM1.62 per share.

Well, so far we only talk about the share price, the price factor of the rights issue has not taken into consideration.

So,

• should TMI shareholder sell their share before the ex-rights date and wait to buy back the share later at lower price?
• should TMI shareholder subscribe to the rights issue and average their costs?
• should TMI shareholder sell their rights entitlement and use the proceeds to buy share in the market?

Which one is better option?

Just wait and see.