Posted by zamsaham > 2013-11-11 00:01 | Report Abuse

No, I don't see any risk there.
Redemption is based on PAR Value, ie if the PAR value changes, the calculation will be different.

You can even sell the LA at anytime, just like an "ordinary" warrants. So what is the issue here exactly?

If you just keep your LA until the maturity, it will be converted to MOTHER SHARE.

Posted by NickCarraway > 2013-11-11 08:49 | Report Abuse

To clarify, RCULS stands for Redeemable Convertible Unsecured Loan Stock.

It is a type of security that can be used to purchase underlying common shares. It is similar to a warrant except that it is subject to the conversion ratio. In essence, an RCULS provides the benefits of a bond until it is converted to an equity. If the loan stocks are redeemable, then on maturity the holder can either convert the RCULS into shares or redeem the RCULS from the issuing company at their par value. Upon conversion into shares, the Number of Shares Outstanding (NOSH) is increased. [source:investopedia]

In this case, redemption is based on Par Value which is fixed at 20sen. Note Par Value is different from Market Value or Net Asset Value.

The RCULS last traded at 86sen. Of course you could buy/sell in the market as long as it is traded. Question is would you buy an instrument trading at 86sen with risk of getting back just 20sen?

You could convert them into ordinary shares only after 1st year. As stated in the term IF NOT REDEEMED (at the option of the co.) , the RCULS shall be converted into ordinary shares at maturity.

The risk is Barakah decided to redeem it prior to maturity at 20sen upon coupon payment date after issuance(read the article).

Posted by zamsaham > 2013-11-11 09:34 | Report Abuse

Nick, no u don't get my explanation. Retail investors are jumping in for short gain. Who cares what is the conversion rate.

Take a logical view on EAH-WA. Premium is over 180%. Why someone in a sane mind would purchase the WA and convert to mother share? WHY?

Doesn't make sense right?

Posted by minshome > 2013-11-28 19:45 | Report Abuse

can know the 3.5% coupon rate per annum is base on LA stock price?

Posted by kiasutrader1 > 2014-05-13 23:30 | Report Abuse

In a bullish environment, rationale gets thrown out of the window until the market falls and everyone looks for the exit door. If Barakah can redeem at 0.20 at every coupon payment date, then the listed price is ridiculous and retailers will get hurt badly. Free market at work or irrational exuberance? Bursa should have alerts regarding this.