No one can force you to pay money. But if you don't, your share of the future profits due to the company will be further diluted.
At a rights issue of 40 cents, they are saying that the perceived value of the company is only worth 40 cents to new investors.
The more important question is, is it compulsory for Jaks to raise money in such a way?
Can Jaks management find another way to raise that money without heavy dilution?
Why did they not go for a 25 year back to back perpetual bond based on the 300+ million earnings that will come from the new power plant instead? They could have done the same deal as topglove bond issuance? Good long term bond to do repayments at minimal dilution of shareholdings.
A private placement at of 1.49 at maximum cash raised to dilution.
The question to ask is why rights issue dilution at the worse possible price, 0.40 RINGGIT?
Shouldn't they be asking for rm1 at least? Or better yet rm1.5? Everyone knows that the power plant will be online soon. Why not wait until then when the share price jumps to rm2.5 TP as per dk66 expectations? Then do the same dilution but now at rm1.3 and raise 3x as much cash. That at least would be fair to current shareholders of the company.
The goal is to pump cash into Jaks for future investment. Why sacrifice so much of the future just for a measly 130 million?
Tgk la announcement tu properly kan it is clearly stated d RI is for loan disbursement purpose
CPEEC dah paid portion nya dah sbb tu at the moment it is 26% : 74% shareholdings
It is timing
JAKS EPC profits originally meant for tis share subscription must b coming in later at tail end of construction tat why x sempat to b used for tis share subscription
Tapi bank loans kena draw down dah mmediately to finance further construction works
It is a very common requirement for banks to ask shareholders to top up share capital b4 they make loan disbursement
Profits from EPC not coming in yet not coming in in time
DK 66 , this time i have different opinion with you. Right issue at extremely low price is only benefit to major shareholder. And this is second time he did that . (or last time was private placement at low price ? ) I think JAKS is a super star due to its powerplant , but i have reserve to CEO's personality due to corporate exercise he had done previously. Ie. private placement at low price (Last time when rebut ticket with uncle koon).
It is not true by saying market price has to trade above RM1.00. No one says that the rights issue price will be fixed at RM0.40, it can be fixed at any price, above or below RM0.40. In the circular, it was stated as "illustrative issue price", meaning, in order to show the calculation, they ASSUME issue price to be at RM0.40. This is just an illustration, not a guidance.
It can fall below RM1 and rights issue price to be fixed at a price lower than RM0.40. Please take note.
From DK66's write up:
In order to give at least 50% discount to TERP, the market price has to trade above RM1.00 during price fixing in order to give 50% discount.
(RM1.00 x 4) + (RM0.4 x 2) /6 = RM0.80 (TERP) => 50% discount => RM0.40 (Right Issue Price).
But I did tell you before that if you were just paying for JAKS powerplant, I will be the first to invest in it. However you will be investing in JAKS the business. Not only that, you are going to be forced to pay up just to keep what you have. What will they do with the business? How will they bring it forward? Will there be more dilution? What new businesses will they be investing in?
These are calculations which is more rationally answered with one question: do you trust the management to manage you company well?
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Posted by warrantKing > May 25, 2020 5:06 PM | Report Abuse
DK 66 , this time i have different opinion with you. Right issue at extremely low price is only benefit to major shareholder. And this is second time he did that . (or last time was private placement at low price ? ) I think JAKS is a super star due to its powerplant , but i have reserve to CEO's personality due to corporate exercise he had done previously. Ie. private placement at low price (Last time when rebut ticket with uncle koon).
Assuming Jaks opens down 10% to 93 sen. For those new investors who buy at 0.93, their eventual cost would be; ((4,000 x 0.93)+(2,000 x 0.4)) / 6 = 0.753 with 1,000 free warrant JAKS-WC easily worth 30 sen. Your net cost per share is only 70 sen.
"As the first 600 megawatt generating unit is expected to be completed and to commence generation of power by the 4 th quarter of 2020, JPP may finance the remaining Project cost subsequent to the Subscription via its internally-generated funds. In this respect, the total subscription amount pursuant to the Subscription Agreement may be reduced from USD467.13 million to an amount to be determined subsequent to the Subscription, subject to further discussion between JPH, CPECC, JPP and JRB. " - Proposal
The total cost savings in construction is USD44.28(equity)+30.35(rcps)+258.52(loan) = USD333.15, hence, 17.83% savings in project costs. Which is similar to Vinh Tan 1's construction savings of 18%. Therefore, the cost to exercise the 10% option will be reduced by 17.83% to about RM205m as well.
Never know why people likes to keep in illusion Let’s wake up otb bubble has gone to far and burst at the moment when shares tumbled from highest down to 52c Only dudu dum dum like you go and chase the shares......wakakakaaka
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
johnmasino
771 posts
Posted by johnmasino > 2020-05-24 19:42 | Report Abuse
Very informative and convincing. Should remove all the doubts that investors may have..LOL..my TP remains at RM4/5/6..LOL