[Update: 7 Mar 2014]
I called SCB to subscribe for my rights and to additional to round up. Relatively fuss free. I'm surprised that they will want to call me back again to verify - guess it's their way to double check. Although SCB dateline is 7 March, the money will be deducted only on 13 March (the last day to accept the rights). *I forgot to apply for additional excess. Shucks.
[Update: 6 Mar 2014]
I received SCB sms and letter on the rights issue on 3 Mar. Dateline given to me is 5pm 7 Mar. I only have 5 days to respond and it is six days before the official dateline.
[Update: 27 Feb 2014]
Rights closed at $0.240. Much lower than the $0.281 I calculated based on my buy price. Selling my rights now will incur a loss of about $10, but I think it will be more as ex-rights price may be lower than TERP. Keeping my fingers crossed and waiting to apply for excess rights.
[Update: 20 Feb 2014]
I managed to buy 1 lot at $1.410. I almost miss out because I thought that the Rights Issue Books Closure Date at 24 Feb is the last day to buy the shares cum rights. I should be looking at "Last day of Units traded “cum-rights” for the Rights Issue".
At my buy price, TERP is $1.361 (include brokerage). It is still lower than the closing price of $1.370 (ex-rights). Two substantial shareholders buying in is also another good sign.
A key observation is that the price fell on the first day after rights announcement. This may not be true for all stocks but I wonder if this is usually the case. Any comments from the rights gurus?
I should be expecting a notification from Standard Chartered to subscribe for rights from 7 March 2014 at 5.00 p.m. (Last date and time for trading of Rights Entitlements) to 13 March 2014 at 5.00 p.m. [Thursday] (Last date and time for acceptance of and payment by the renouncees). I will call them up earlier if there is no news from them since it will take a longer time for them to process my order.
I will like to thank the blogging community for writing about the upcoming AIMS rights exercise and especially to La papillion on his excellent
article.
I'm not going to debate on the pros and cons of rights or the fundamentals of the company. I'm simply taking a bet (tikam) in hoping to make some pocket money. I will probably be taking part in other rights exercise. Hence this post will be the first of many to track my progress.
With a limited budget, I can only apply for 1 to 3 lots. Based on LP's
table, I will apply for 1 lot to get the most excess rights to round up. While 6 lots is more ideal, my calculations show that the 'profit' is not that far off from applying 1 lot. But of course, you will 'profit' more if you get way more excess rights. To reduce commission, I'll be using Standard Chartered Trading account. This is a first for me. Instead of going to the ATM, I will have to talk to someone - sounds like calling my broker.
Below are my calculations. Do note that some figures are hypothetical numbers e.g. TERP. Logically, if you get more excess rights, or if the mother share rises and you bought rights at a steeper discount, you would earn more. However this may not be the case.
Hi, it seems like you did not include the cost of the nil-paid rights in your scenario B, which you will need to pay to buy the excess rights. Correct?
Hi Jason,
I don’t have to buy nil-paid rights in order to apply for excess rights. I’ll have 175 units entitle rights and just apply for additional 825 units excess. Usually, they will give it to you “free” so that you don’t end up with odd lots. Hence, I just need to pay for the rights that I subscribed.
I understand now. Thanks.
To the gurus,
If I do buy nil-paid rights, I will then be guaranteed the relevant amount of rights. In such a case, is it still considered as “excess” rights?
Hi Derek,
When you say ‘buy nil paid rights’, you mean from the market during the trading period right? If so, then once you bought it, it’s guaranteed to be yours. It’s not considered excess rights because the term ‘excess’ is used if you want to subscribe to rights above and beyond what you are entitled. Subscribe means you might get it, you might not, though you have preference if the excess rights you subscribed is used to round up odd lots. Still, it’s not guaranteed.
E.g. 1
You bought 1 lot of aims mother share when it’s CR, so you have 0.175 lot of entitled rights. You apply for excess rights of 0.825 lot to round up. During the trading period for the nil-paid rights, you also bought 2 lots off the market, paying the brokerage costs for doing so too.
Total number of nil-paid rights = 0.175 + 0.825 + 2 = 3 lots
Total amt you have to pay at ATM before 13th Mar 2014 = 3 x 1.08 x 1000 = $3,240
In the end, you might have only 0.175 (entitled) + 2 (bought off market) = 2.175 lots of paid rights. Though most likely, you’ll have 3 lots of paid rights, so total 4 lots of shares.
Thanks LP.
I wonder if buying through Standard Chartered will complicate things if such a scenario happen. I heard from my friend that the time allocated to subscribe for the rights will be tighter than what is stated by AIMS.
Hi Derek,
Ya, I heard from others too. I think it’s tighter because after getting your instructions, they also need to execute within the time frame applicable to every other people. It’s okay lah, just prepare the money lol