Ezra : Convertible Bonds and Right Issue, what is convertible bonds........

[lifeafter41]

Was talking to an old friend over the weekend. Kpkb on the shares he is holding on Ezra, Told me he took quite a big hit as he average down on the share prices, all in he hold about 200lots, after the averaging from S$1 plus till to date. Loss he did not mention, but seeing the last traded of 0.29, he must have lost quite a fair bit.

Now understand from him, Ezra is calling for rights issue with 200 for every 100 owned, not so clear on what does convertible bond means though.
But definitely for sure, he has to cough out more money for the rights unless he takes a loss.

 

[zookeeper]

what does convertible bond means though.

Convertible Bond = bond convert to (meaning exchange for) shares at a predefined rate and time

Right issue = need not cough out money, should be able to sell off rights, got to check documents for details

 

[Runifyouhaveto]

Convertible Bond = bond convert to (meaning exchange for) shares at a predefined rate and time

Right issue = need not cough out money, should be able to sell off rights, got to check documents for details

Usually the % yield for the convertible bond is very low, compared to other bonds from the same company,
Eg. Tiger Airways Convertible Bond gives 2%pa because of the convertible feature.

What is the yield for this convertible bond? Sorry i cannot find the information.
http://www.ocbcresearch.com/Article.aspx?type=research&id=20150603093122_18199

 

[SockPuppet]

Was talking to an old friend over the weekend. Kpkb on the shares he is holding on Ezra, Told me he took quite a big hit as he average down on the share prices, all in he hold about 200lots, after the averaging from S$1 plus till to date. Loss he did not mention, but seeing the last traded of 0.29, he must have lost quite a fair bit.

Now understand from him, Ezra is calling for rights issue with 200 for every 100 owned, not so clear on what does convertible bond means though.
But definitely for sure, he has to cough out more money for the rights unless he takes a loss.

it depends on what averaging strategy he use.
by the way what is Erza involved in?

 

[Unrepented]

Marine services. Few years back, made 5X killing, low 0.4 to 0.7 up down then boom to high S$2+

it depends on what averaging strategy he use.
by the way what is Erza involved in?

 

[Merl Haggard]

Was talking to an old friend over the weekend. Kpkb on the shares he is holding on Ezra, Told me he took quite a big hit as he average down on the share prices, all in he hold about 200lots, after the averaging from S$1 plus till to date. Loss he did not mention, but seeing the last traded of 0.29, he must have lost quite a fair bit.

Now understand from him, Ezra is calling for rights issue with 200 for every 100 owned, not so clear on what does convertible bond means though.
But definitely for sure, he has to cough out more money for the rights unless he takes a loss.

Forget about Ezra for it's heading towards sub 20C.

When share price was trading between $1 to $2, Chairman son bought himself a private jet and led a damn high life with his fleet of exotic cars.

 

[lifeafter41]

Forget about Ezra for it's heading towards sub 20C.

When share price was trading between $1 to $2, Chairman son bought himself a private jet and led a damn high life with his fleet of exotic cars.

Jialat, if goes to sub20c, he going to kpkb even louder. Maybe should ask him to cut loss, rather than throwing good money after bad.

Merl, any other recommendations?

 

[Runifyouhaveto]

Jialat, if goes to sub20c, he going to kpkb even louder. Maybe should ask him to cut loss, rather than throwing good money after bad.

Merl, any other recommendations?

Take clue from tiger's last CB and rights issue and study the daily transaction prices during the rights trading period.

Part 1 Objective: Compare Yields
- *check the yield offered for the CB, give up the CB if it is not worth it. *



Part 2 Objective: Lock-in the gain/differences between mama shares n rights
- underwriter usually ensures that the mother shares trades at respectable premium (eg. 5% higher) against the rights (inclusive of exercise price) during the short "rights trading period". Offload the mother share and buy the same quantity of rights from the market during the "rights trading period"(not apply). In this way, your friend can lock-in a small gain through the switch.*

Note: if he does the switch on the first day and the share price continues to drop until the last day of the "rights trading period" = he will still suffer additional capital losses

Note: likewise if he sell the mother shares on first day and buy back on another day, this is more like speculating, which is not the purpose of our discussion.



Part 3: Apply for excess rights
Exercise your allocated rights
Exercise your newly purchased rights (after selling mother share)
Apply for excess rights allocations, as much as possible*
- if you are allocated excess rights after the rights-trading period, this = immediate profits
- please note that only original shareholders whose name appeared before and after "Ex-All, XALL or Ex-rights" and allocated the initial rights, are allowed to apply for excess rights. If you are not a shareholder in the first place, buying the rights outright will not necessarily qualify u to apply for excess rights.




My kapoh 2 cents, lose money don't blame me

 

[zookeeper]

Maybe should ask him to cut loss, rather than throwing good money after bad.

I kaypoh a bit. Not an advice.

Share price and CB/RI are two different issues.

Share price = speculation/trade/investment issues
CB/RI = financing issues

Ezra's business performance is closely linked to oil price.
Oil price goes up -> More business expectation -> Higher share price performance
Oil price goes down -> Less business expectation -> Lower share price performance
Where do you think oil price is heading?

The reason for CB/RI is debt gearing and debt financing.
When business was good few years ago, bank was willing to lend more money to you -> you borrowed and expanded rapidly
-> as a result you are now having high debt and high interest payment
-> now business is down -> you cannot generate enough cashflow to finance the debt payment
-> you then turn to your shareholders for monies to cut down the size of debt

 

[Merl Haggard]

Forget about Ezra for it's heading towards sub 20C.

When share price was trading between $1 to $2, Chairman bought himself a private jet and led a damn high life with his fleet of exotic cars.

Ezra today plunged to a low of 0.159!

 

[zookeeper]

Ezra today plunged to a low of 0.159!

From around 39cts (before Right Issue announcement) to around 16 cts (after Right Issue, plus a bit of selling pressure) is more or less expected.