Much ink has been spilt about Singapore Airlines' (SIA) rights issue and rights mandatory convertible bonds (MCBs) (SIA rights issue to strengthen balance sheet for future: CEO, May 15).
Yet sadly for the everyday Singaporean investor, it has not been less confusing.
Many of the investors are loyal customers of the airline as well as from the older generation who bought SIA shares as an extension of their trust of the Singapore Government.
Watching as things unfold, however, I cannot help but feel that the average investor has been hung out to dry.
For instance, for every 1,000 shares of SIA, an investor gets 2,950 rights MCBs. The investor has three options:
One, subscribe to the MCBs. But this assumes the investor has deep pockets.
Two, let the rights MCBs expire.
Three, sell the rights MCBs in the open market during the eight-day trading window.
But here comes the catch.
For the third option, the brokerage fees to sell the rights MCBs currently exceed the sale price. This means investors have to pay money to sell the rights MCBs.
In essence, the rights MCBs are actually a negative asset to the everyday investor.
Next, in the event that the investor chooses the second option, what I would have expected to happen is that the rights to buy the MCBs expire and cease to exist.
But Singapore investment firm Temasek, the main shareholder, has pledged to take up any remaining shares and bonds that are not subscribed (Passengers must adapt to different travel experience: SIA, May 16). The everyday investor cannot help but feel short-changed.
A solution to this would be simple and render tremendous goodwill - that is, Temasek undertakes to buy the rights MCBs from shareholders at a nominal fee without having the investor go through a brokerage.
This would mean that the everyday investor may be able to get a small sum for a right that is supposed to confer benefits on him.
Greg Clayton
https://www.straitstimes.com/forum/...-to-help-retail-investors-in-sia-rights-issue
Yet sadly for the everyday Singaporean investor, it has not been less confusing.
Many of the investors are loyal customers of the airline as well as from the older generation who bought SIA shares as an extension of their trust of the Singapore Government.
Watching as things unfold, however, I cannot help but feel that the average investor has been hung out to dry.
For instance, for every 1,000 shares of SIA, an investor gets 2,950 rights MCBs. The investor has three options:
One, subscribe to the MCBs. But this assumes the investor has deep pockets.
Two, let the rights MCBs expire.
Three, sell the rights MCBs in the open market during the eight-day trading window.
But here comes the catch.
For the third option, the brokerage fees to sell the rights MCBs currently exceed the sale price. This means investors have to pay money to sell the rights MCBs.
In essence, the rights MCBs are actually a negative asset to the everyday investor.
Next, in the event that the investor chooses the second option, what I would have expected to happen is that the rights to buy the MCBs expire and cease to exist.
But Singapore investment firm Temasek, the main shareholder, has pledged to take up any remaining shares and bonds that are not subscribed (Passengers must adapt to different travel experience: SIA, May 16). The everyday investor cannot help but feel short-changed.
A solution to this would be simple and render tremendous goodwill - that is, Temasek undertakes to buy the rights MCBs from shareholders at a nominal fee without having the investor go through a brokerage.
This would mean that the everyday investor may be able to get a small sum for a right that is supposed to confer benefits on him.
Greg Clayton
https://www.straitstimes.com/forum/...-to-help-retail-investors-in-sia-rights-issue
