The Singapore Airlines (SIA) (SGX:C6L) rights issue is a complicated one and I bet most shareholders don’t know what is going on.
I always believe that financial products are not shampoos and education is the only way to bridge the knowledge gap.
I took the liberty to record a walkthrough of the rights issue document and highlight the salient points for SIA shareholders to take note of.
If you are not a video person, you can read the following main points accompanied with some explanations.
SIA is offering 2 different rights issues to raise money.
- Rights shares
- Rights Mandatory Convertible Bonds (MCBs)
Rights Shares
Rights Shares Issue: SIA is issuing more shares to raise money. Only shareholders will receive the rights to buy more shares. The cutoff date for the shareholder list is on 5 May 2020, 5pm. Thereafter, you won’t be able to receive the rights shares even if you buy SIA shares. For every 2 shares you have, you will get 3 rights shares. You don’t need to pay for the rights. They would be automatically deposited into your CDP or custodian accounts.
Renounceable rights: The rights shares are tradable on SGX. You can buy and sell them like a normal stock. If you don’t want to exercise the rights, you should sell them off. If you want to buy more shares you can also buy more rights and exercise them later. The rights shares will start trading from 13 May 2020, 9am till 21 May 2020, 5pm. The name of the rights shares will be “SIA R” with the symbol “LRDR”.
Issue Price at $3: This means that you need to pay $3 per rights share in order to convert the rights into shares. The exercise deadline is on 28 May 2020, 5pm. If you hold the shares in a custodian account, your broker may set a deadline earlier than 28 May. So take note of the timing. You have to pay for the rights via ATM if you hold the rights in CDP and transfer the money to your brokerage account if the rights are held under custody.
Theoretical Ex-rights Price (TERP) of S$4.40: SIA share price was around $6+ before the rights shares issue. As the new shares are issued at S$3, you can expect SIA share price to trade lower to around S$4.40 after the rights are issued. But the market may not trade according to this theoretical price.
Rights MCBs
Rights MCBs Issue: Besides the rights shares issue, SIA is also issuing rights MCBs to raise more cash. I suspect the reason for issuing MCBs is because there would be too much dilution if it is a pure rights shares issue and SIA share price will have to trade much lower. Thus to be clear, these are bonds and not shares.
Only shareholders will receive the rights to buy these bonds. The cutoff date for the shareholder list is on 5 May 2020, 5pm. Thereafter, you won’t be able to receive the rights MCBs even if you buy SIA shares. You will receive 295 rights MCBs for every 100 SIA shares you own. You don’t need to pay for the rights. They would be automatically deposited into your CDP or custodian accounts.
Renounceable rights: The rights MCBs are tradable on SGX. You can buy and sell like them like a normal stock. If you don’t want to exercise the rights, you should sell them off. If you want to buy more bonds you can also buy more rights and exercise them later. The rights MCBs will start trading from 13 May 2020, 9am till 21 May 2020, 5pm. The name of the rights MCBs will be “SIA MCB R” with the symbol “GANR”.
Issue Price at $1: This means that you need to pay $1 per rights MCB in order to convert the rights into bonds. The exercise deadline is on 28 May 2020, 5pm. If you hold the shares in a custodian account, your broker may set a deadline earlier than 28 May. So take note of the timing. You have to pay for the rights via ATM if you hold the rights in CDP and transfer the money to your brokerage account if the rights are held under custody.
Zero-coupon: The MCBs are zero-coupon bonds which means you will not receive interest payments. Instead, you will receive a maturity amount that is higher than the principal you have put in. The maturity amount is equivalent to S$1,806.11 based on $1,000 principal. Or every $1 you put in, you get $1.81 at the end of 10 years.
Mandatory Conversion: As the name emphasised mandatory conversion, this means that the bonds will be converted to SIA shares upon maturity. There will be no cash paid to you.
Callable: The MCBs are also redeemable by SIA before maturity. They can have the option to redeem once every 6 months. Your yield will range between 4% and 6% depending on the year of redemption. The closer to the maturity, the higher the yield.
SIA Rights Issues FAQ
Q: How soon will I see the rights in my CDP / custodian account?
Not sure. But definitely before 13 May 2020 because the rights will start trading.
Q: What prices should the rights shares and rights MCBs trade at?
Price of the Rights Shares should trade close to SIA share price – $3.
Price of the Rights MCBs should trade close to $0.
Q: I will have odd lots of Rights Shares and Rights MCBs, how do I sell them?
There are two more counters, SIA R1 (symbol:HTFR) and SIA MCB R1 (symbol:8YJR), where you can sell your odd lots. Ask your broker if you can amalgamate the orders for the R and R1 so that you only pay commission once.
Q: If my SIA shares are held under CPFIS, must I buy the Rights & MCBs using my CPF fund? If I decided to sell the Rights, will the proceeds go back to CPF or cash?
Yes, you can use CPF to fund the rights purchase, provided your CPF limit allows.
If you sell the rights, the monies will go back to your CPF.
Q: I have SIA shares which I have bought using cash, would I be able to exercise them with CPFIS instead of cash?
No. You have to use cash.
Q: I have SIA shares in my SRS account, what do I need to do?
Your agent bank which holds your shares in custody should inform you about your rights shares and MCBs. You have to follow their instructions to exercise them. Otherwise, you should sell the rights.
Q: How are our shares diluted if we don’t subscribe to the rights shares?
Your % ownership of SIA will reduce. Assuming you have 1m shares. And you didn’t buy more but the number of shares will increase anyway. So your % stake can drop from 0.08% to 0.03%.
Q: If i do not own any SIA share can i buy the rights shares?And how do these rights shares work after I buy them?
Yes, you can buy the rights shares even if you do not have SIA shares. After you buy the rights shares, you still have to pay to convert the rights to shares. Don’t buy if you have no intention to exercise the rights, because the rights will expire.
Q: Do we need to pay $4.84 for a MCB in order to convert it to a SIA share in 10 years’ time?
No need to pay. They will just give you the shares in exchange for the bonds.
Conclusion
We hope that we have simplified these rights issues to you. You have to understand this and decide what to do if you are a shareholder. Either sell the rights or exercise them. Don’t let the rights expire worthless!
Thanks for the video, Alvin. It is really helpful. Can I clarify something further?
I refer you to this para:
“For every 2 shares you have, you will get 3 rights shares. You don’t need to pay for the rights. They would be automatically deposited into your CDP or custodian accounts.”
I am a current shareholder of SIA shares. I would definitely want to own the rights shares to avoid dilution of my current shares. And I certainly would not want to trade (i.e. sell them) them; nor do I wish to add to my exposure to the airline industry at this point.
My question is then: Since these share rights will be automatically deposited into my CDP or custodian account, does it mean I need not do anything? Also, since my SIA shares are being held in my POEMS account, does that mean that the new average share price (of my current shares + new share rights) will be automatically adjusted too?
The rights are given to you. But you must pay $3 per rights share to convert it to SIA shares. If you don’t, the rights will expire and Temasek will buy them up. You will suffer dilution.
Otherwise, sell the rights in the window and get back some cash.
And no, poems will not auto adjust your average price.
Hi Alvin,
So how do we check on our “rights” to pay? I am also using POEMS and it does not indicate anything at all. As per what you mentioned, sell the rights, does it mean we have to share the shares we have? Appreciate your advice on the matter.
Regards,
Mike
The shares and the rights are different counters. You will be given the rights but I dont know when your broker will credit them into the system. But definitely you should get them before 13 May because the rights start to trade on SGX.
You can keep SIA shares and sell the rights.
Hi, may I know when do the rights expire?
Rights will expire on 28 May 2020. They will stop trading on 21 May 2020.
Hi Alvin,
Thanks for the explanation. One question, when you say sell the rights in the window, does that mean we sell it as per normal trading on 13th May onwards? Am I able to sell both share and MCB rights?
Would the price to sell equal to the TERP? Thanks.
Yes. you can sell the rights between 13 and 21 May 2020.
Price of the Rights Shares will be close to SIA share price – $3.
Price of the Rights MCBs will be close to $0.
Hi Alvin
I sold my SIA share today…but I still entitled to rights. How do I trade my rights ? Will there be trading price per right starting 13 May?
Yes. there will be a price once it starts trading
The theoretical ex-rights price should be 4.16 and not $4.40.
depends on the price of SIA shares used to calculate the theoretical ex-rights price.
If one can buy the rights and then convert to SIA shares at $3, then am I right to say that SIA shares will start to trade even lower than $4.40, towards the $3 rights price ? Eventually the rights and share price will meet somewhere between?
The rights cost money. So if SIA shares is $4.40. You need to pay $1.40 to buy the rights and another $3 to convert it to SIA shares. Altoghether $4.40.
I have SIA shares in my SRS account – how am I affected and what should I do?
Thanks.
Your agent bank which holds your shares in custody should inform you about your rights shares and MCBs. You have to follow their instructions on what the next steps are.
Do we need to pay $4.84 for a MCB in order to convert it to a SIA share at 10 years time if MCBs are not redeemed by the company ?
No need to pay. They will just give you the shares in exchange for the bonds.
Hi Alvin, does that mean SIA shares is expected to be around $4.84 in 10 years time?
No. It is just the conversion price that they set at this moment
How soon will I see the rights in my CDP account?
Not sure. But definitely before 13 May 2020.
1.Is ATM the only way to sell rights if we are Sia shareholder?
2. How are our shares diluted if we don’t buy Sia rights? I am Sia shareholder.
1. ATM is to exercise the rights and convert them to SIA shares. You have to use a broker to sell the rights as they will trade on SGX within a timeframe. If you have no intention to convert you should sell the rights.
2. Your % ownership of SIA will reduce. Assuming you have 1m shares. And you didn’t buy more. But the number of shares will increase anyway. So your % stake can drop from 0.08% to 0.03%.
Does it mean, investors should not enter SIA market now as there are no benefits?
It is better to avoid if you see no clear opportunities.
Hi Alvin,
I have purchased 3800 SIA shares in my FSMOne account. May am I what should I do?
Thanks.
Reply
Did you purchase them before or on 6 May 2020?
Hi Alvin,
I bought 2800 shares before 6 May and 1000 shares on 6 May. So far, I have not received any letters or emails from FSM.
Thanks
Hi Alvin,
Just to add on, I bought 2800 shares @$5.96 before 6 May and bought another 1000 shares@$4.83 on 6 May, without understanding that it was XR. Now, then I realized it was terrible mistake! How I wished I had watched your video earlier.
I calculated that if I will to exercise my rights for my shares, my average per share price will become to be @$4.27 for the total of 8000 shares. Would this be a good strategy to should consider?
Thanks
Give them a few more days 🙂
Dear Alvin,
Thank you for the very useful video and summary. Helped me understand so many of the points.
Thanks Alvin.
Appreciate your clear explanation.
If my SIA shares is under CPFIS, must I buy the Rights & MCBs using my CPF fund?
If I decided to sell the Rights, will the proceeds go back to CPF or CASH?
Yes, you can use CPF to fund the rights purchase, provided your CPF limit allows.
If you sell the rights, the monies will go back to your CPF.
How do we fund and execute the rights conversion and mcb if we bought SIA shares with cpf before 6may20? Is it also through atm for cpf funded share purchase? Is the conversion of both only to be done on 28may20? Or there is a period of days to do so? Thank you.
you have to use CPF to fund the conversions. Your agent bank would send u a letter with instructions
I have SIA shares which i bought in cash, may i know for rights can i buy with CPFIS instead of cash?
thanks
I don’t think so but you can check with your broker.
Hi chow
If i do not own any SIA share can i buy the right share?
And how does this right share works after i buy?
Yes, you can buy the rights shares. After you buy the rights shares, you still have to pay to convert the rights to shares. Don’t buy if you have no intention to exercise the rights, because the rights will expire.
Hi Alvin
Thank for your reply.
So u mean if i buy the right share @ $4.40 and i need to convert @ $3 =$ 7.40. So that mean i have to pay $ 7.40 per shares.
Is that correct?
If you are entitled the rights as a SIA shareholder, you only need to pay $3 per rights share to convert the rights to SIA shares.
I made a mistake of buying SIA shares on 6 May. Dun think it’s in my CDP ac yet. Is there anything I need to do?
you wont have the rights.
An excellent video Alvin, thanks for creating this video. Makes it easier for us to understand these complex jargons!
Today the shares traded at $4.70. Assuming my theoretical cost price is $420 and I sold 1000. To realise my gain of $500, does it mean I have to buy the rights to convert 600 shares to realise the gain of $500?
To realise your gain, you can just sell the rights.
You can also exercise the rights and you should have paper gains.
You can also sell the shares after you converted them to realise the profits, but depending on the market price then.
Hi Alvin,
I bought 10,000 shares at $4.96 blindly on 7 May 2020.
Shall I sell at asap to avoid further fall of the share price?
U mean 6 May? 7 May is a public holiday and SIA shares weren’t trading.
If so, you won’t get the rights. We wouldn’t know if the share price would rise or fall going forward. You should sell if you think it was a mistake. You should hold if you believe the stock will work out in the future.
Hi Mr Alvin,
Let’s say if I own 3000 SIA Shares at Record Date with CDP, that means I will be automatically be allocated with 4500 Rights Shares and 8850 Rights MCB in my CDP?
If I do not want both the Rights Shares & Rights MCB, then I should trade them off (just like how we trade for normal shares) thru the SGX platform right? If I didn’t trade them off, then it will just forfeited from me without me getting a single cents right?
Roughly (as a guide) what would be the trading price of Rights Share and Rights MCB)?
Is there a minimum lot size for trading both the Rights Shares & Rights MCB in SGX?
Your understanding is correct.
Rights shares should trade at SIA share price – $3.
Rights MCBs should trade close to $0.
If you have odd lots like 8850 in this case, there’s a SIA MCB R1 (Symbol: 8YJR) which you can trade the 50 shares away.
Thanks so much for your explanation, very clear & throughout????????. Btw I love your video clip above on the SIA Rights. I have learned a lot of things from there. Many thanks & kudos to you????????????????????????
Hi Alvin,
I thought that if one does not trade the Rights and/or MCB during the trading week from 13-21 May, it automatically means you want to convert them into shares and bonds, and have about 1 week to pay till 28 May ?
No. You can dont trade the rights and also dont exercise them. But one would lose the most in this situation.
So, sell the rights if there’s no intention to exercise them. Or keep the rights and exercise them.
There’s also a combination – sell some rights and convert some.
Soc gen has determined the ex price to be $3.71.
Can you kindly comment on this?
Thank you.
It depends on the trading price they use. As SIA share price changes, the theoretical price changes
I have sia shares in cdp account. Will I be receiving any notifications regarding the number of rights that are offered to me?
You will receive a letter to your registered address to ask if you want to exercise the rights. They will indicate the number of rights too.
But if you want to sell the rights better to login and check how many rights you have instead of waiting for the letter.
Hi Sir, I have bought SIA share at 4.40 at closing price, will my share become diluted when start trading after 28 May, Thanks.
The price has already gone ex-rights such that you can buy at 4.40. Otherwise it was trading closer to $6.
You are not entitled the rights.
I have bought on May 4th. Am I eligible to participate in the rights issue.
Yes
Hi Alvin,
Would like to clarify on “For every 2 shares you have, you will get 3 rights shares.” Does this means that the existing shares that I am holding will still be with me, on top of it I be given the “rights shares”.?
e.g. 100 SIA Shares + 150 Rights Shares. Right Shares which can be converted to SIA Share at the rate of $3 each? In total, I be having 250 SIA Shares?
Additional, 295 MCB will be given for every 100 SIA Shares.
Yes. you still hold the existing shares. The rest of the rights are given to you. But you have to decide whether you want to exercise them by paying money, else better to sell them.
Hi Alvin,
Thank you for clarifying, it helps alot! Lastly, why would the “Price of the Rights MCBs be close to $0”? Isn’t it fixed at $1?
“Issue Price at $1: This means that you need to pay $1 per rights MCB in order to convert the rights into bonds.”
The MCBs are worth $1 per bond. The Rights MCBs trade close to $0.
Thank you for the explanation.
Hello… thanks for your excellent presentation. Why is it that Rights MCB will trade close to zero?
The MCB is worth $1 now and about $1.81 in 10 years.
The Rights MCB is to grant you the right to buy a MCB at $1.
Assuming if the rights MCB trades at $1. That means it will cost you $2 and get back $1.81 in 10 years time. It doesn’t make sense. nobody will buy it.
Hence, it should trade close to $0 such that you get to buy the MCBs at principal value.
Hi Alvin, thanks so much. It is so helpful to layman ppl like me.
Two questions please 🙂
1) when will I see my rights? in my trading ac right? otherwise, how to trade..
2) how to exercise rights? once right become shares, do I get further rights on these new shares?
Meaning, I have 2000 SIA shares, so I get 3000 rights. These 3000 rights I pay $9000 to convert to 3000 shares. These new shares, do I get rights also?
1) You should see them in your CPD or trading account depending where your SIA shares are custodised. Exact date of crediting of rights I am not sure. But definitely before 13 May 2020.
2) You dont get additional rights on the shares you have converted.
Thanks for the clear summary! How is Rights Shares traded online? Any rough indication or estimation value of these Rights Shares that will enter the market from 13 to 21 may, or subject to market forces? I understand these Rights will be given FOC to all shareholders (CR) to consider (buy or sell) before 28 may.
The rights shares will trade like any other stocks.
Price of the Rights Shares will be close to SIA share price – $3.
Price of the Rights MCBs will be close to $0.
You have to trade them by 21 may, not 28 may. 28 may is the deadline to pay money to exercise the rights.
Hi Alvin,
Will one MCB be converted to one SIA share at $4.84 in 10 years time?
Thanks.
no. 1 MCB will be worth $1.81 in 10 years’ time. Divide that by $4.84 to convert to number of shares.
So if you have 1,000 MCBs. 1,810 / 4.84 = 373 shares
Thanks Alvin.
Thanks very much for a fantastic video and explanation.
I own 4000 shares in my vickers account bought before 5th May. So I should get 6000 rights shares. and MCB offer.
If I trade both is it likely the trading price for Rights go below or it should be minimum 3/share and MCB 0/Share?
Price of the Rights Shares will be close to (SIA share price – $3).
Price of the Rights MCBs will be close to $0.
Hi,
If i brought the shares on 6 May, will the price be expected to dip further due to dilution on date of right shares issuance?
The XR has already taken care of the dilution. But market sentiment can still drive the share price above or below the theoretical value of the dilution.
Hi Alvin,
if 1 have 8500 shares now bought at average $6.40 during MArch.
And i will like to sell both the Shares and the Rights once trading allows from 13th May. May i ask what will be your best guess profit or loss i will make? Thank you
Albert
Price of the Rights Shares should trade close to (prevailing SIA share price – $3)
Price of the Rights MCBs should trade close to $0.
Hi Alvin,
Thank you for the clear and concise explanation.
Would like to clarify, I bought SIA shares before and after 5th May. Is the Rights Shares allocation based on total shares own or only those before 5th May?
before 6 may. If you buy on 6 may, you have no rights.
hi Alvin, many thanks for the explanation.
scenario A. if I sell my Rights (say 1000shares by 21 May), I will be paid $3000. means I earn $3k for 1000shares sold.
scenario B. if I don’t sell but exercise (means buy ya?), I will have to pay $3k for 1000shares.
So, it the Rights starts trading after 28 May (correct?), say share price becomes $4.40, isnt that total I kind of have “foot” $6 per share, ie: lost $1.60?
confused on which directions to go!!
A: The rights exercise price is $3. The rights trading price is unknown, but should be around SIA share price – $3. So if SIA share price is $4, the rights is $1. Means you sell 1000 rights shares would be $1,000.
B: Yes.
rights trades between 13 may to 21 may. After that the rights have no value if you don’t exercise them to convert to shares.
I don’t quite understand MCBs, you mentioned that “every $1 you put in, you get $1.81 at the end of 10 years”, and “bonds will be converted to SIA shares upon maturity”.
If I have 2950 MCBs and i convert the rights to bonds, at the end of 10 years I get 2950 * $1.81 = $5339.5 and 2950 SIA shares since the bonds will be converted to shares upon maturity?
For illustrative purposes, assuming a principal amount of S$1,000:
i. Final Accreted Principal Amount = S$1,000 * (1 + 0.06 / 2) ^ 20 = S$1,806.11
ii. No. of Rights MCBs Conversion Shares to be issued = S$1,806.11 / S$4.84 = 373 Shares (rounded down as fractional entitlements are
disregarded)
1. Currently I have 1,000 sia shares, so if I were to pay $2,950 to exercise my mcb rights, come 10years’ time, my $2,950 will b worth 1,100 sia shares?
2. If sia is trading at $4 in 10 years’ time, I will get $4,400 if I were to sell it right?
3. Do u know if there is a market to sell the mcb before it matures in the next 10 years?
1) Yes
2) Yes
3) yes. it will trade like a retail bond, listed on sgx.
Thanks for taking time to respond to my query!!
Hi Alvin,
Thank you for great video 🙂 very helpful.
Can I please ask:
– I do own 1,000 SIA shares (bought in April at price ~5.60 )
1) if I do nothing and if I do not claim my Rights Issue, I understand that I will lose money, since my shares will be diluted.
2) so it seems like the best option would be for me to exercise the Rights Issue, and then sell them on the market between 13-21 May.
3) If I just want to sell the rights issue between 13-21 May, I dont have to pay the 3 SGD – right? Since I will basically recieve money for my sold Rights Issue.
Thank you so much
1) Yes.
2) You sell the rights, not exercise them. Exercise means you pay to convert the rights to shares/MCBs.
3) Yes.
Hi Alvin,
Thank you for great video 🙂 very helpful.
Can I please ask:
– I do own 1,000 SIA shares (bought in April at price ~5.60 )
1) if I do nothing and if I do not claim my Rights Issue, I understand that I will lose money, since my shares will be diluted.
2) so it seems like the best option would be for me to exercise the Rights Issue, and then sell them on the market between 13-21 May.
Thank you so much
Hi, thanks for the article. I would like to know how exactly the execution is expected to be in exercising the rights.
Just need to wait for the hardcopy letter on what the next steps are, right? Typically that is expected to include details who to pay to and where to press on the ATM?
In exercising the rights, this is a direct transaction with CDP for CDP-held original shares, and no longer involve the broker channel for settlement, is it?
Thank you ..
Yes. Your understanding is correct. If you have your shares custodised with the broker then the broker will send you the letter instead of CDP.
Hi Alvin,
Thanks for sharing, it is pretty clear. How do I pay the rights if my rights is with CDP? Only can pay via ATM? can I pay via broker?
if your shares with CDP = ATM
if your shares with broker = pay broker
Hi Mr Chow,
If I have an SIA rights shares and rights MCB and decided to sell them on trading day , do I need to pay for it first or I will just get the difference of the amount?
Thank you.
no need. You only pay when you want to exercise them.
Hi Alvin,
My shares are in a custodian account. I have 2 questions:
1. Will the share rights trading price be fixed at around $3 or it’s dynamic depending on supply/demand?
2. May I know how to exercise my MCB rights? Do I pay through my custodian account broker or ATM?
Thanks.
1. The exercise price is at $3. The rights shares will trade around (SIA share price – $3)
2. You should receive a letter from your broker. Follow the instructions to exercise your rights.
Thanks for the prompt reply, Alvin.
One last clarification. If I own 600 share rights and I want to sell them all between 13-21May, will I get $3 x 600 or (TERP – $3) x 600 ?
Rights Shares Price x 600
Rights shares price should trade around (SIA share price – $3)
Hi Alvin,
You mentioned the Rights shares price should trade around (SIA share price – $3). Assuming the price for trading rights shares (on SIA R counter) on 13 May onwards is $2.90, the total cost will be $5.90 ($2.90+ $3) for each SIA share upon exercising the rights, which is more expensive than the current market price of $4.40 – $4.60 range?
yes. and likely the SIA share price would be higher if that happens.
Hi Sir,
Thank you for taking the time to explain so clearly. I am sorry, I don’t understand why the MCBs will trade close to Zero when trading starts.
Appreciate your explanation. Thank you
The MCB is worth $1 now and about $1.81 in 10 years.
The Rights MCB is to grant you the right to buy a MCB at $1.
Assuming if the rights MCB trades at $1. That means it will cost you $2 and get back $1.81 in 10 years time. It doesn’t make sense. nobody will buy it.
Hence, it should trade close to $0 such that you get to buy the MCBs at principal value.
Hi Alvin,
I am still a bit confused.
-I have 1,000 shares – which I bought at 5.6= total value 5600 SGD
-Now i will get Rights Issues of 1,500 before 13 May
– If I want to sell my rights issues on Monday and lets say the price of shares is 4.40 at that time, it will mean:
1) if I sell the 1,500 rights – i will earn 4.4-3=1.4 per right, so total 1.4 x1,500 = 2,100 SGD (just by selling the rights?)
2) if I then also want to sell my existing 1000 shares at 4.4 price, I would get = 4.4 x 1000 = 4,400 SGD.
3) so total gain is 4,400 +2,100 = 6,500 and since I bought them at 5,600 ( I would still make 900 bucks).
Is my understanding correct?
Thanks million!
Yes. your understanding is correct.
Hi Mr Chow
Thanks for your prompt and concise replies on others queries. However, i have a few questions about the exercising the rights: (Pardon me as this is my first time exercising the rights)
1) Understand from the previous question that a letter will be deliver to me on the exercising of rights. How do i sell my rights instead of buying them via ATM? I don’t see any option as mentioned in your article “rights shares will be “SIA R” with the symbol “LRDR”” in either my CDP or DBS Vickers account.
2) You mentioned about shares with broker or CDP. How do i know where my shares is with. I bought through DBS vickers and i am able to view it CDP, so am i right to say that my shares is with CDP as i do not have any outstanding with Vickers.
Thank You
Zasper
1) The stocks are not credited to your CDP yet. And they haven’t start trading. You can only sell them earliest on 13 May 2020
2) Yes. They are in CDP.
Can I convert the MCB into SIA shares before the maturity date ? It would make sense to covert if SIA trade well above $4.84 .
no. Only SIA can redeem them early. MCB holders have no such rights.
In SGX website, the ex-date is 6th May and the record date is 8th May (7th May is public holiday). Does that mean buyers are entitled to the rights if they bought SIA shares on the 6th May?
no. 6 may is Ex-Rights which means excluding the rights.
Hi Mr Chow
Thank you.
Since shares transacted after 6 May is Ex-rights, so if i am to sell my shares (100 Shares) which is acquired before 6 may , am i still eligible for the rights since the indicative timeline showed that shares bought before 6 May have the option to exercise rights.
Zasper
Yes. you get the rights if you transacted before 6 May XR.
Hi Alvin,
good information.
if i bought sia shares prior to 6 May’20 with cpfis,
1) i am not able to see the rights in my cpf account, nor can i see it in my agent bank (UOB) cpfis holdings. how do i know if i am issued the rights?
2) what should i do if i want sell the rights issues? Is the only timeframe to sell the rights (through LRDR counter) between 13 May to 21 May?
Thanks a lot.
1) We don’t know when the rights will be credited. But definitely before 13 May 2020.
2) Sell them like how you sell your normal stocks between 13 May and 21 May 2020.
Thanks Alvin,
1) got it. that means it will appear anytime fr now till before 13 May.
2) I assume you mean selling the rights through my usual broker which is POEMS? I do not know if POEMS will have the linkage to those rights issue from CPF (since i bought the mother shares via CPF).
appreciate your explanation again.
2) as long as you can store your shares in CDP when you buy through this POEMS account, you can use it to sell your rights in your CDP. But just take note that your broker platform wont reflect the rights. You can see them in your CDP account.
i don’t really see the shares in CDP. i need to know where to see the rights. i am really unclear on how it works with my shares in CPFIS with the agent Bank.
and so i don’t see any rights issue in the same place on agent bank, how will I be able to sell if there is no place storing the allocated rights?
Not yet probably. the allocation is not immediate.
Hi Alvin,
1. Am i right to say that there is no rights and no action needed for those who bought sia share on or after 6 may?
2. There is rights for those who bought the share on or before 5 may? The price is being diluted but more lots if exercising the rights?
3. Being seeing people commenting on the video that youve shardd but i couldnt find it here?
Thank you.
1) There are no rights for those who bought SIA shares on and after 6 May 2020.
2) Yes.
3) It is playable at the top of the post. or you can visit youtube: https://youtu.be/eeXMg7jE4lA
Hi Alvin,
First of all, thank you so much for sharing your knowledge, really helps a lot!
Wish to check if my understanding is correct:
I am currently holding 800 shares. I’ll be given free 1200 Right shares and 2360 MCB rights, in addition to my 800 ordinary shares.
#1. If I decided to sell these rights between 13-21 May, I will:
(a) receive $2400 in my CDP account if I sold my 1200 Right shares
(b) receive nothing for selling my MCB rights
(c) still have the original 800 shares in my CDP account?
#2. If I decided to exercise individual rights, I will need to pay by 28 May:
(a) pay $3600 to convert 1200 Right shares to ordinary 1200 ordinary shares
(b) pay $2360 in order to get $2360 values in bond which is callable every 6 months. Upon maturity, I will get 487 ordinary shares in return + 800 original shares, summing up to 1287 ordinary shares?
How do I make payment (a) and (b)?
Appreciate your kind advice. Thanks Alvin
Zoey
1a) Depends on the rights shares trading price.
1b) Close to nothing. Price of rights MCBs should range from $0 to $0.81.
1c) yes
2a) yes
2b) you pay 2360 but value would be about 4271 at maturity. divide that by a conversion price of 4.84, you get about 882 SIA shares in 10 years’ time.
Hello Alvin,
I’ve sia shares purchased last year. It’s with CDP. My CDP residential address is overseas. I’m a Singapore PR. Will I be offered the rights?
Thanks
For practical reasons and in order to avoid any violation of the securities legislation applicable
in countries other than Singapore, the rights to the Rights Shares and Rights MCBs will NOT
be offered to Shareholders with registered addresses outside Singapore as at the Record
Date and who have not, at least three market days prior to the Record Date, provided CDP or
the Company’s Share Registrar, as the case may be, with addresses in Singapore for the
service of notices and documents, subject to certain limited exceptions and/or unless
otherwise reasonably determined by the Directors that the Rights Shares or, as the case may
be, Rights MCBs may be offered based on applicable securities legislation (“Foreign
Shareholders”).
I think you better ask CDP directly as soon as possible.
Hi Alvin,
Thanks for the video, it’s very insightful!
1) I have bought 200 SIA shares at $5.92 in March 2020 so total will be $$1,184 (excluding comms etc), so for Rights issue of 3 for 2, i can exercise the 300 rights at $3/share?
2) Do i stand to lose if I don’t exercise my rights? Meaning what will happen to my existing 200 SIA shares?
3) In your opinion, do you recommend to exercise the rights or sell them?
Thanks.
1) yes.
2) u will have 200 SIA shares. But your % share of SIA will go lower because the overall number of shares will increase by 1.5 times.
3) If you believe in SIA as an investment, you should subscribe. If not, you should sell.
Thank you, Alvin
Dear Alvin,
Thank you for the great video, it’s really helpul.
Small question.
I bought SIA shares in April through my DBS iwealth portal. So that mean I will be receiving the information regarding the right shares and MCBs on my DBS portal ?
Kind regards
Mitch
Im not sure if it is connected to your CDP. you have to check with your broker.
Yes it should be connected because I bought SSB early last year through the DBS portal and those SSB are nox reflected in my CDP account.
Thank you Alvin for your support 😉
Dear Alvin,
It’s ok, I can see now the rights shares and MCBs on my portal.
Small aditional question: I’m seeing that on May 13th, it’s the first day for payment if we want to participate to this insuance. It’s also mention “excess Rights Shares and/or excess Rights MCBs “. Does that mean that we can buy more that the rights we receice ? If yes, how is it working ?
Thank you for your support
Yes. you can buy more rights from the open market and exercise them once you have them.
Hi Alvin,
If I own 3000 SIA Shares at Record Date with CDP, that means I will be automatically be allocated with 4500 Rights Share in my CDP correct?
Then If I sell my 3000 SIA shares today, I still have the right to sell the 4500 Rights share?
You get the rights if you have shares prior to Ex-right date, not record date.
If so, you still get the rights whether you have your SIA shares now or not.
I would like to know the SIA Shares Rights and MCBs. I have purchase the SIA via CPF fund (DBS Bank Investment Account) and purchase through Poems. May I know am I entitle any Rights or MCBs for SIA Shares? But I did not received any letters from SIA with regards about the rights or notification email. I only received the General Meeting Notification from SIA? May I know where to check whether am I entitle for the Rights or MCBs? I understand it would be too late on this.
May I know what will happen? Your help will be greatly appreciated. Thank you very much.
you have bought shares before 6 May then you should have the rights. The letters should arrive next week.
Hi Alvin,
I bought my shares before 5 May through Stand Chart Investment account. If this is the case does it mean the rights will be deposited in my account with stand chart?
Thanks!
Yes. You should receive communications from stand chart on what to do next
Hi Alvin,
Thanks for clarifying on this issue above! I have also purchased SIA shares via Standard Chartered Online Trading platform on 27th March. With the communications you mentioned earlier, just to double confirm that we should expect it before 13th May?
On your timeline above, 13 May onwards will be when SIA rights can be exercised/traded.
You should be able to see the rights in your account before 13 May. As for the letter, it might be later. I’m not sure. Best check with your broker!
Dear Alvin,
Thanks for the very informative video and its really well done!
Just like to confirm my understanding is correct. If I purchased the SIA shares on the 6th May. This entire option stuff will be irrelevant to me other than probably expecting a drop in the shares price right?
You wouldn’t have the rights because the counter has went Ex-Rights on 6 May
Many thanks Alvin
Hi Mr Chow,
I have bought some shares after 6th May. Will my shares be diluted or it will be trading as per normal? Thanks.
trade as normal but prices will continue to fluctuate
Hi Alvin,
I thought the trading price of the Rights share should be around the current SIA share price – $3? If current share price is $4.5, it will be traded around $1.5, since the buyer still have to pay another $3 to convert to shares.
I may be wrong. Pls advise.
yes.
Errrr..…. you said “Price of the Rights Shares should trade close to SIA share price – $3” based on TERP of S$4.40 and that the rights issue price is S$3. How can it be? I buy a rights share in the market for $3 and pay another $3 for the rights share? cost will be $6?
if SIA share price is $4. The rights should trade at $4-$3 which is $1.
Hi Alvin,
Just to clarify my understanding below:
1) If I intend to sell my rights share of 200 SIA shares, this mean I will sell off 300 shares at $3/share for $900?
2) If I intend to sell my MCB rights of 200 SIA shares, this mean I will sell off 590 shares at $1/share for $590?
3) After selling off, will the money be credited back to my bank?
Thanks!
1) Dont mistake rights exercise prive vs rights trading price. They are different. The rights should trade around SIA share price minus $3.
2) Again. Different. The trading price is probably trading closer to $0.
3) Depends on your arrangement with the broker / CDP.