Posted by nicky > 2014-01-11 07:30 | Report Abuse

Funny y mother so strong n LA red

Posted by Firebird2 > 2014-01-11 09:28 | Report Abuse

Hope it will catch up when nearer to conversion

Posted by Bala8977 > 2014-01-11 10:45 | Report Abuse

Correct me if I'm wrong here, it is stated in their web page that the exercise /strike/conversion price is 20cts, does it mean we have to pay additional 20 cts
To convert to the mother. Tq

Posted by blissleen > 2014-01-11 15:32 | Report Abuse

issit advicable to buy LA now?

Posted by sifuexperience > 2014-01-11 15:34 | Report Abuse

UOB KayHian recommended barakah-la too.

Posted by blissleen > 2014-01-11 15:40 | Report Abuse

Thanks sifuexperience =)

Posted by Albert Baker > 2014-01-11 22:29 | Report Abuse

Please someone help us to translate the above LA discussion in a simple lay men understanding.

Posted by awangngah > 2014-01-11 22:32 | Report Abuse

Guys, for those who don't quite understand the features of Barakah' s 5-year 3.5% RCULS (redeemable convertible unsecured loan stocks) please study the prospectus carefully. You can find it here --- http://announcements.bursamalaysia.com/EDMS/subweb.nsf/all/0F3CE29E2A40D27248257BFA00187731/$File/BARAKAH-AbridgedProspectus.pdf

Please note that it has a feature akin to warrant i.e the convertibility feature, but it also has one feature which all holders should be aware of, i.e. the redeemable feature which effectively gives Barakah the right to redeem the RCULS based on the par value of RM0.20 each during the life of the RCULS.

The second feature is what all holders should be very mindful of.

Posted by nicky > 2014-01-12 07:04 | Report Abuse

Make it simple . Conversion need to top up RM0.20 on maturity date Oct 14 ??

Posted by awangngah > 2014-01-12 08:34 | Report Abuse

Nicky, from my understanding, No. And, maturity date is not Oct 14, but Oct 24, 2018. As for the conversion price, the following is what is stated under the RCULS's Principal Terms & Conditions (see Prospectus, Appendix III, page 62):

Conversion price
Fixed at par value of RM0.20 per Barakah Share and shall be satisfied by surrendering one (1) RCULS of nominal value of RM0.20 each for every one (1) new Barakah Share

Posted by awangngah > 2014-01-12 09:44 | Report Abuse

Here's a good article to read before you decide to buy these RCULS.

http://klse.i3investor.com/blogs/race/40725.jsp

Posted by martinng > 2014-01-12 11:07 | Report Abuse

Correct me if I am wrong. The earliest date they can redeem the LAs is 24 April and they must give notice by 24 March.

Posted by martinng > 2014-01-12 14:35 | Report Abuse

From my understanding, the risky period is until the start of the conversion period (Oct 2014-Oct 2018). Thereafter, holders of the LA can convert to the mother share by giving 30 days' notice. As per HLIB analysis, the probability of the major shareholders approving a redemption of the LA is very low. But, they could be wrong. Then again, why would the major shareholders who hold more than 40% of the LAs would prefer to get back 20 sen per LA rather than converting their LAs into mother shares which are worth more?!
Why would Barakah redeem the LAs so soon after their issuance? Do they have the money to redeem? They could borrow but it defeats the purpose of issuing the LAs in the first place!
However, keep a close eye on the major shareholders! Are they selling or buying the LAs?

Posted by awangngah > 2014-01-12 16:49 | Report Abuse

Yes, the risk period is until October 24, 2014 (the first anniversary date) coz the convertibility of the LA only starts the day after. So long as buyers are aware of the potential risk, and understand that the risk profile of this RCULS is not the same as a warrant (at least until Oct 24, 2014), then the decision to buy is theirs to make.

Posted by JCool > 2014-01-12 18:50 | Report Abuse

Care to paste here.... wat Hong Leong Bank n UOB KayHian wrote abt barakah-la.... to hv a look...

Posted by zamsaham > 2014-01-12 19:43 | Report Abuse

Posted by awangngah > Jan 12, 2014 09:44 AM | Report Abuse

Here's a good article to read before you decide to buy these RCULS.

http://klse.i3investor.com/blogs/race/40725.jsp

That guy is delirious.
Come this October, you can filed for conversion. 1 LA= 1 Mother. Confirmed liao.

So AwangNgah - u believe what written on the blog 100% - kesian. Call up the Share Registrar to know more.

Posted by zamsaham > 2014-01-12 19:44 | Report Abuse

From HONG LEONG

Barakah-LA (NOT RATED)

Cheaper Proxy with Higher Leverage…

§ Mispricing from the market creates buying opportunity… 1) Zero cost conversion: Each Barakah-LA can be converted into Barakah shares after 25 Oct 2014 with zero cost by surrendering one RCULS of nominal value of RM0.20 each for every one new Barakah shares. This suggests Barakah-LA is currently trading at 18% discount to Barakah shares.

§ 2) Almost zero possibility to redeem at par value of RM0.20: We think it is almost zero possibility for the company to redeem Barakah-LA at RM0.20 per share due to: i) the main purpose for issuing RCULS is to refinancing debts for purchasing of pipe-laying barge; ii) major shareholders of company (lead by Nik Hamdan and Azman Shah have sizeable stake in Barakah-LA (>40% of total issued, very highly unlikely they will approve any redemption proposal); and iii) recent purchase of Barakah-LA by management on open market at RM1.16-1.20 reaffirms our thesis that Barakah-LA is a cheaper proxy to leverage on the company growth prospect.

§ Cheaper proxy and better leverage with upside potential of 23% to 58%...(Refer below)





§ With upside potential of 23% to 58% and downside risk of 12%, the risk and reward for Barakah-LA at this level is attractive and favorable. It is also cheaper proxy for investors who are looking to build a long-term position in Barakah shares with better leverage on the upside potential.

Posted by JCool > 2014-01-12 21:10 | Report Abuse

Tqvm... How abt UOBs??

Posted by awangngah > 2014-01-12 21:37 | Report Abuse

Well Zamsaham, I was just trying to highlight the difference between RCLUS and a warrant for those who thinks that the RCULS is a warrant and therefore share the same risk. I am very aware of risk inherent in each of the product as I was heading a capital markets department in an investment banks for many years, and was involved in the issuance of these types of securities. I don't need to depend on blogs to understand them -- just that I found a write up which I thought clearly explained the inherent risk, and decided to share the link with those interested to know.

Posted by JCool > 2014-01-12 21:44 | Report Abuse

No UOBs...???? Want to buy 1st tomoro b4 u paste....

Well.... b careful...

u wil b put in a spot whr.... damned if d LA is redeemed..... damned if d LA is not....

Posted by awangngah > 2014-01-12 22:05 | Report Abuse

u'll only be damned if the LA is redeemed...Not if the LA is not :)

Posted by ktrader > 2014-01-12 22:10 | Report Abuse

awang, you're damn right!!

Posted by Maki Yoon > 2014-01-12 22:37 | Report Abuse

Based on my obversation on i3, many people were worried that Barakah-LA (7251LA) could potentially be redeemed by Barakah Offshore Petroleum Berhad ("the Company") at 0.20 per Barakah LA.

Based on my research, I feel that the chances of redemption of Barakah LA ("RCULS") by the Company is minimal.

Referring to page 9 (Point 4) of the Abridged Prospectus of Barakah, the rationale for issuing the RCULS is to enable Barakah to partially re-finance its bank borrowings and referring to page 10 (Point 5), the current interest rate of the Company is 8.1% per annum, by issuing the RCULS, they would have RM1.9million in savings per annum.

As such, these are the reasons I feel it is highly unlikely (Almost zero percent chance) that the Company will redeem the RCULS:

1. If the Company dont redeem it, they can continue to pay 3.5% interest on RCULS (Prior to issuing, they are serving 8.1% interest per annum on existing loans), which is significantly below market loan interest.

2. If they dont redeem it, there will be no cash outflow to the Company

3. It is better to let the RCULS holders to convert to Barakah mother shares because by letting them do so:

- They will pay lesser interest on the RCULS due to conversion of RCULS to mother shares (but the amount of loan they already raised is the same). Meaning they will be paying even lesser interest on the RCULS.

- No cash outflow to the Company.

4. Their directors themself are also holding the RCULS, if they redeem it, they also will lose alot of money.

Posted by nicky > 2014-01-13 07:41 | Report Abuse

Thanks for d explanation

Posted by JCool > 2014-01-13 12:32 | Report Abuse

HLBs write up is half past six.... n awangngah i m afraid u r wrong.... my man

While.. damned if d LA is redeemed is obvious...

It seems to me all around here has not a clue of d impact if d LA is not redeemed

If u r thinking of buying d LA now at 1.45 thn happily convert it to d mother n sell at 1.75... n in d process making a tidy profit.... think again

Do u all know d number of LA issued by Barakah?!

Let me tell u.... it is 208,000,000... 208 millions

So...... do u get it now??

No.....

Ok........ let's assume u know d number of shares issued by Barakah now is 624,000,000....... now add d 208,000,000 new shares from d conversion of ur LA......... CAN U IMAGINE D DILUTION IN EPS tis is going to cause?? It wil b a freaking 25%...... as d share cap wil thn balloon to 832,000,000

So..... as d EPS is diluted.... d mother's price wil b hit by a reduction of 25% to 1.31... ie 1.75 x (100-25)%

Down to 1.31... but hey u hv bot ur LA at 1.45...

n so oh yes .... damned too if d LA is not redeemed

But of cos d one suffering d most wld b those who bot d mom.... 25% loss to b exact...

Posted by awangngah > 2014-01-13 21:40 | Report Abuse

Well JCool, you have a very valid point about the dilution in EPS due to the conversion, but I personally am not unduly worried as I believe in the biz of Barakah and its potential growth. IMHO, the theoretical reduction in share price, could be recoup in no time as long as the business continues to grow. This aspect is true for almost all shares where there are outstanding warrants.

My concern is with redemption coz' although the probability may be low as some have argued, there still remain the possibility. Should the LA be redeemed, then you can say that one will be damned coz you'll only get back RM0.20 after having paid say RM1.44/RCULS.

Whatever it is, each of us has different risk appetite. I for one can't afford to take too high a risk. As such I invested in Barakah shares instead of the RCULS. For those who can take higher risk, and therefore may potentially reap higher returns, they may opt for the RCULS instead of paying 31 sen or circa 20% extra for the mother shares (based on today's closing price), especially if they believe that the RCULS will never be redeemed.

What is important is for each of us to understand the features of the instruments and make decisions based on the understanding of the risk/reward profile. I'm here not to give any suggestion as to whether one should or shouldn't buy the RCULS, but to just highlight the important features which some of us may not be aware of.

Posted by JCool > 2014-01-14 09:07 | Report Abuse

Tis redemption thingy.... has great impact.... n is gonna happen in jz months..... not years


While HLB is betting thr wil b no redemption....

MBBs stance is rather unclear... as it has not mentioned tis redemption at all..... so either its stance is...

thr wil b redemption.. as such.. no dilution.... n thus..... in total disagreement wit HLB...

Or..

in d worst case scenario...... it has missed d redemption thingy..... n hv not factored in d dilution in EPS.... tis can only means its TP of 1.98 is grossly overstated by 25%... or shd in fact b jz 1.48....

Posted by teddy070703 > 2014-02-06 11:34 | Report Abuse

The term of RCULS:
1. redeem out of net cash (ie cant redeem if still have borrowing)
2. redemption starts after 1 yr from listing date
3. holders can opt to convert during the notice of redemption if any....

if the above if true, buy RCULs for its 40sen discount ...

Posted by brendonyeap > 2014-02-10 22:05 | Report Abuse

Dear all, i would be glad if you guys could explain what are the differences btw ICULS and RCULS? TQ!

Posted by kcyim1970 > 2014-02-13 22:35 | Report Abuse

Hey, everyone. Thank you for all your explanation. You have let learned something new on Barakah-LA which I have never thought before this. Since I am holding about 30 lots, I really need to rethink my strategies in holding the same.

Posted by imoogi99 > 2014-02-13 23:12 | Report Abuse

Wow....a lot of fear putting in here...no wonder LA is not moving....when there's fear, it is time to be greedy.

Posted by kcyim1970 > 2014-02-13 23:41 | Report Abuse

Barakah-LA holders still have another 8 months more before the 1 year period expires for redemption to take place if it ever happens. 8 months to contemparory investors are deemed extremly long. At this juncture, players may just bank on the imminent news on the contract from Saudi Arabia.

Posted by kcyim1970 > 2014-02-14 21:33 | Report Abuse

After having better understanding in the mechanism of the LA, I sold off a portion of LAs at a minimal profit to buy the mother share. Hope that I didn't make the wrong decision. So far, it was observed that the mother share moved more vigorously than the LA.

Posted by camel > 2014-04-24 19:10 | Report Abuse

buy LA,if you know calculation.

Posted by Jian Bin Siew > 2014-05-02 20:21 | Report Abuse

I think LA is a cheaper proxy to enter barakah. After Oct, the conversion rate is 1 LA to 1 mother share. Means we buy barakah at RM1.38 based on closing price of barakah LA today.

Posted by Jian Bin Siew > 2014-05-02 20:28 | Report Abuse

http://www.google.com/webhp?client=tablet-android-samsung&source=android-home#q=Barakah+la+by+9+of+jan+hlebroking

Posted by Khai Yip Tan > 2014-05-05 10:11 | Report Abuse

Hi, I am new to warrant, I would like to ask why you guys say this year October is the 1 year period expires for redemption? I thought the maturity date for the warrant is on October 2018?

Posted by Siew Jian Bin > 2014-05-06 10:22 | Report Abuse

Yes, maturity is on Oct 2018 but we can convert the warrant only after the first year of the listing date.

Posted by vicky > 2014-05-07 19:01 | Report Abuse

How to convert warrant to mother share later?

Posted by JayC > 2014-09-04 14:52 | Report Abuse

the main shareholder have huge load of RCULS. they will also be effected if they convert the RCULS. so they will not go the disadvantage way

Posted by Lollipot Anison > 2014-09-10 22:31 | Report Abuse

they will not redeem the LA. The main purpose they issue LA is refinancing, it will defeat their purpose if they redeem now.

Posted by JayC > 2014-09-25 15:55 | Report Abuse

so today , 25th Sept we can strat converting the LA

Posted by JayC > 2014-10-23 15:23 | Report Abuse

should i convert my LA to mother share now? seems mohter is trading at very high premium of 5%

Posted by zamsaham > 2014-11-20 11:27 | Report Abuse

LA and mother same price. So what would the strategy will be?