As a seasoned investor myself, I must share this rare arbitrage opportunity to my fellow investors. The company had actually caught my attention and no one is looking at it right now. This is exactly why the company poses an attractive trading opportunity for all investors.

1.       TWL Holdings Berhad (TWL) will be undergoing a rights issue of Redeemable Convertible Unsecured Loan Stocks (RCULS) with free Warrants E together, on the basis of 10 RCULS together with 2 Warrants E for every 10 existing shares of TWL held by the entitled shareholder.

2.       Dated 26^th April 2023, the company had fixed the conversion price of the RCULS and Warrant E at RM0.03, representing a 24.24% discount to the Theoretical Ex-All Price (TEAP) of RM0.0479.

3.       For information, the issue price of the RCULS is RM0.02 per share, this is also the nominal value of the RCULS.

4.       This information is important because investors can still invest in TWL prior to 18^th May 2023, the ex-date of the rights issue to be entitled for the RCULS.

5.       Investors with RCULS may choose to surrender them on 3 RCULS for 2 new shares of TWL, or to pay the difference between the aggregate nominal value of RCULS against the conversion price, which is effectively RM0.01 per TWL share.

6.       Scenario:

Investors A had 300,000 units of TWL at the costs of RM0.04. Subsequently, the investor decided to subscribe fully to the rights issue at a costs per RCULS at RM0.02, resulting in investor A holding another 300,000 units of TWL-RCULS.

With the subscription, investor A is also entitled for 60,000 units of free Warrants E together.

Taking the straight-line method, the average costs per TWL of the investor should be RM0.035 upon full conversion of the RCULS.

Method A:

(300,000 units * RM0.04) + (300,000 units * RM0.03) = 600,000 units @ RM0.035 per share

Method B:

(300,000 units * RM0.04) + (200,000 units * RM0.02) = 500,000 units @ RM0.032 per share

7.       Given the TEAP of TWL is RM0.0479 according to the announcement, a discount to RM0.04 (worse case scenario) still governs a profit of 14% to 25%. This is excluding the fact that investor A still had 60,000 units of free Warrant E with nominal value of RM0.010 (RM0.04 market value – RM0.03 conversion price).

8.       No one had noticed TWL yet, and the current price is still cheap for arbitrage investors to take note of the company.

In conclusion, TWL presents a potentially profitable investment opportunity for those willing to seize it. With its rights issue coming up soon, now is the perfect time to consider adding this hidden gem to your portfolio.