YTLP share dividend 1 for 20, book closure and distribution date on 3 Mar and 27 Mar respectively
Share dividend will lead to adjustment downward in warrant exercise price from 1.21 to around 1.13
The calculation is based on last YTLP share dividend 1: 40, lead to adjustment 4sen in warrant conversion price from 1.25 to 1.21. Therefore, current share dividend 1:20, should theoretically lead to adjustment 8sen from 1.21 to 1.13
The Board of Directors of YTL Power International Berhad is pleased to declare a distribution of one (1) treasury share for every twenty (20) existing ordinary shares of RM0.50 each held (“Share Dividend”). The book closure date for the Share Dividend is 13 March 2014 (“Book Closure Date”). Fractions of treasury shares are to be disregarded. The exercise price of the Warrants 2008/2018 will be adjusted in accordance with the Deed Poll dated 5 May 2008 and such adjustments will be effective from the commencement of the day next following the Book Closure Date for the Share Dividend. Holders of Warrants 2008/2018 who have not exercised their warrants by 5.00 p.m. on 3 March 2014 will be notified in due course of the quantum of the adjustment to the exercise price of the Warrants 2008/2018.
The condition is same as previous adjustment in exercise price
The previous is share dividend 1:40 Adjusted warrant conversion price = [(C-D)/C] x RM 1.25
C= current share price, preceding to date of the announcement, 1.77 D= share dividend ratio x current share price, 0.0443 Adjusted warrant conversion 1.2187
Actual adjustment is 4sen to 1.21
The current share dividend 1:20 Adjusted warrant conversion price = [(C-D)/C] x RM 1.21
C= current share price, preceding to date of the announcement, 1.70 D= share dividend ratio x current share price, 0.085 Adjusted warrant conversion 1.1495
Actual adjustment is 7sen to 1.14
Remark: The adjusted warrant conversion 1.1495, but according to Deed poll, any adjustment to the warrant exercise price will be rounded down to the nearest one sen, which mean the actual adjusted price will be 1.14
share dividend benefit both ytlp & wb. better choice than cancellation.
1. ytlp shareholders get more shares 2. wb exercise price get adjusted 3. treasury shares get reduce 5% instead of 3.5% (cancel) higher margin 4. sbb got higher margin to exercise 5. first good news to both ytlp & wb
A. Impact on Yeoh stake There is difference between share dividend and cancellation on Yeoh stake, in which Yeoh effective stake is increase higher more in cancellation compared to share dividend. This is because the total number of share is reduce in cancellation compared to share volume redistribute back in share dividend. However, as long as sbb continue, Yeoh stake will also gradually growth in tandem
2. Impact on share price The share dividend have more positive impact on share price compared with share cancellation. As shareholder is rewarded additional free share in short term compared to cancellation which have longer term impact on EPS. Fund manager and analyst will prefer share dividend than cancellation, and share price likely subject to re-rating as share dividend indirectly give to dividend yield and YTLP will perceived as high yield stock which can command higher valuatio
1MBD replaces auditors, gets time extension to submit accounts
......................... On another matter in relation to 1MDB, the Govern-ment said that it had yet to award the 2,000 megawatt coal-fired power plant project called Project 3B.
The Energy, Green Technology and Water Ministry in a statement dismissed talk on 1MDB being awarded the project as “baseless and mere speculation.”
The ministry said the Energy Commission would make an announcement soon on the award. “The process is transparent in line with the competitive bidding system that has been put in place for the bidding of projects by independent power producers, which is to ensure, among others, fairness and competitiveness,” it added.
1MDB is in a neck-and-neck race with YTL Power International Bhd for the rights to build the power plant, with its bid marginally higher at 25.65 sen per kWh as compared with YTL Power’s bid at 25.23 sen per kWh
Is the reported award of a coal-fired power plant to uncompetitive bidder 1Malaysia Development Bhd (1MDB) a "backdoor bailout for the financially-stricken company", asks Petaling Jaya Utara MP Tony Pua.
Citing a report in The Edge Weekly that 1MDB was apparently mired in "multi-billion ringgit loans" from its various high-cost acquisitions, Pua said: "It does not take a financial genius to wonder how 1MDB will be able to repay the principal on these multi-billion ringgit loans."
He asked whether this was the impetus behind the award of Project 3B, a 2,000MW greenfield coal-fired power plant, to 1MDB despite its bid being higher than others, and despite the Energy Commission's technical evaluation committee recommending the YTL Power bid.
'1MDB pursues reckless acquisition strategy'
"Therefore it seems to be the strategy for Prime Minister Najib Abdul Razak's administration to award a new independent power producer (IPP) concession to 1MDB, even if it means higher electricity costs for the man-on-the-street, in order to bailout the debt-stricken company and cover up, to some extent, its massive deficits," he said.
Pua said 1MDB has since 2012 "pursued a reckless acquisition strategy to takeover independent power producers with expiring contracts at very high premiums, financed almost entirely with loans".
These include the acquisition of Tanjong Energy Sdn Bhd for RM8.5 billion, Genting Sanyen for RM2.35 billion and Jimah power plant for RM1.2 billion, all costing a total of RM12.05 billion.
"However, as reported in the latest issue of The Edge Weekly, the cashflow generated by these acquisitions barely covers the annual RM650 million interest expense to finance the loans 1MDB took."
Ministry: Awarding of plant not started yet
Yesterday the Ministry of Energy, Green Technology and Water denied in a statement the award of the coal-fired power plant to 1MDB and it went on to call Pua's earlier statements "baseless and mere speculation".
According to Bernama, the ministry said the awarding of the contract for the plant has not started yet and would be announced "in due course".
"The process is transparent, in line with the competitive bidding system that has been put in place for the bidding of projects by IPPs, which is to ensure, among others, fairness and competitiveness," the Energy Ministry is reported as saying.
It said the plant is expected to start commercial operations on Oct 17, 2017.
Tenaga-China National Machinery Import & Export Corp is one of the five bidders, alongside 1MDB-Mitsui & Co, Formis Resources, YTL Power International and Malakoff Corporation Bhd.
Despite the Energy Ministry's denial of the award to 1MDB, Pua pointed out today that “The Edge clearly has information” to the contrary.
He added: “I am not only ready to be proven wrong, I also hope that I am wrong in thinking that the prime minister will prioritise the bailing out of 1MDB against lower cost of electricity to ordinary Malaysians.:
NO ORDINARY DELAY! 1MDB's late accounts puts spotlight on Cayman Islands deal - Tony Written by Tony Pua
1MDB’s change of auditors from KPMG to Deloitte Malaysia is no ordinary change
After the expose I made last week with regards to the change of auditors for 1MDB, the company has confirmed in its statement on 21st February that it had appointed Deloitte, a Big 4 accounting firm, to complete the audit for the year ended 31st March, 2013, saying this was done after "it was mutually agreed with KPMG that the firm would cease to be 1MDB’s auditors."
Contrary to being accused of a suspicious move, 1MDB argued that "This is nothing special or new as it is in line with best market practice where companies decide on its current or future auditors after considering all aspects, including but not limited to conflict of interests and other consideration".
1MDB could not be more wrong, or we could perhaps forgive its management of attempting to make light of a very bad situation. There is no “best practice” in this world which says that it is perfectly normal to suddenly change auditors long after the accounts were overdue. Had the change been made well before the end of 1MDB financial year Mar 2013, there would have been little for us to question the company.
No ordinary delay
However, when the accounts are significantly delayed by nearly a year, and the auditor quits before it gets finalised, then surely every rakyat has the right to ask for an honest explanation. For example, why couldn’t the change of auditors be done only for the Mar 2014 accounts?
The irony is, the Managing Partner of Deloitte, Mr Tan Theng Hooi himself cited (The Star 2/8/2012) that the "failure to release financials on time is not acceptable and may indicate there could be unresolved accounting, management or other issues in hand”, when criticisng public listed companies for late publication of financial statements.
In Malaysia, as well as in countries like the United States, public listed companies are given only 6-8 weeks to report their quarterly accounts. While 1MDB isn’t a listed company, it is a sovereign wealth fund which is of even greater public importance, and it is only required to file its reports once a year! And yet, despite the appointment of KPMG, a top international accounting firm, it is overdue on its financial report by nearly a year.
1MDB gave the excuse that “its new business direction has helped it grown exponentially, requiring consolidation of new subsidiaries into the group” and hence the delay in its accounts. The excuse does not hold water because its acquisitions were not any more complicated than many carried out by some of our largest companies on the stock exchange – such as the Sime Darby acquisition of Guthrie and Golden Hope Plantations. And yet, these companies were able to finalise their accounts in a time manner in accordance to the stringent rules set by Bursa Malaysia.
Why go in when borrowing costs were so much higher than the returns
1MDB’s own response showed Cayman Islands “investment” doesn’t make any financial sense when the cost of borrowing is higher than the returns on investment!
In the same 21st February response to my earlier criticisms, 1MDB also defended its mysterious US$2.32 billion “investment” in Cayman Islands.
1MDB said it had “invested the proceeds with regulated and licensed international fund managers. These fund managers adopt an absolute return strategy of which the primary investment objective is to achieve long-term capital appreciation and/or steady income through investments in listed and/or unlisted companies".
"A total of US$200 million (RM658.9 million) has been remitted from the fund to the 1MDB group in Malaysia to service repayment. Out of this, US$134 million (RM430 million) is from the 5.76% cash dividend generated within the 1st year of the investment period.”
I’d like to thank 1MDB for highlighting the fact that it has received a 5.76% return in its first year of investment in the unnamed Cayman Island fund manager. Under normal circumstances, the 5.76% return may look acceptable, albeit a little mediocre. However, these are not normal circumstances.
The reason why the US$2.32 billion was invested in Cayman Islands in the first place is because 1MDB terminated and redeemed its 11-year loan to Petrosaudi International Limited in 2012, when the multi-part loans were to mostly mature in the year 2021. The loan to Petrosaudi, in the form of “Murabaha notes” commanded a guaranteed fixed interest (“profit rate”) of 8.67% per annum.
Hence it must be asked, why did 1MDB redeem its loan earning a guaranteed fixed return of 8.67% and invest in a fund manager in Cayman Islands which it refuses to name, giving a return of only 5.76%? Does that make any financial sense?
However, even if we were to ignore the fact that the Murabaha Notes were paying a very profitable 8.67%, it must be reminded that 1MDB borrowed all the money used to make the above investments.
The bulk of 1MDB’s borrowings for the above investments were raised in 2009 via an Islamic loan facility “sukuk” where 1MDB had to pay 5.75% interest (“coupon rate”). In lay man’s terms, this means that 1MDB is borrowing money at 5.75% interest to invest in an anonymous Cayman Islands fund which gave a return of 5.76%! Does that make any financial sense?
Worse, 1MDB had offered the above sukuk at a massive 12% discount – meaning it only received RM87.92 in loan funds, for every RM100 it borrowed. But 1MDB has to pay 5.75% interest on the full RM100. Hence the effective interest rate payable by 1MDB for the sukuk is 6.71%. In lay man’s terms, this means that 1MDB is borrowing money at an effective interest of 6.71% to invest in an anonymous Cayman Islands fund which gave a return of 5.76%. What a fantastic investment strategy!
I look forward to being lectured by any fund manager who can justify the above 1MDB tailor-made investment strategy. The rational thing for 1MDB to do, which it must do, to avoid further embarrassing losses for the rakyat, is for the company to withdraw the funds from this Cayman Island fund-or-fund-manager-which-cannot-not-be-named to pay-off its sukuk debt, guaranteed by the Federal Government, costing 6.71% per annum.
Otherwise, the rakyat is forced to speculate if this mysterious US$2.32 billion investment in the secretive Cayman Island fund was the reason why "it was mutually agreed with KPMG that the firm would cease to be 1MDB’s auditors."
13 comments:
PAVREIT - Sold at 1.30.
CMMT - Bought 1.34, sold at 1.35
SUNREIT - Sold at 1.26 & 1.29.
YTLP share dividend 1 for 20, book closure and distribution date on 3 Mar and 27 Mar respectively
Share dividend will lead to adjustment downward in warrant exercise price from 1.21 to around 1.13
The calculation is based on last YTLP share dividend 1: 40, lead to adjustment 4sen in warrant conversion price from 1.25 to 1.21. Therefore, current share dividend 1:20, should theoretically lead to adjustment 8sen from 1.21 to 1.13
The Board of Directors of YTL Power International Berhad is pleased to declare a distribution of one (1) treasury share for every twenty (20) existing ordinary shares of RM0.50 each held (“Share Dividend”). The book closure date for the Share Dividend is 13 March 2014 (“Book Closure Date”). Fractions of treasury shares are to be disregarded.
The exercise price of the Warrants 2008/2018 will be adjusted in accordance with the Deed Poll dated 5 May 2008 and such adjustments will be effective from the commencement of the day next following the Book Closure Date for the Share Dividend. Holders of Warrants 2008/2018 who have not exercised their warrants by 5.00 p.m. on 3 March 2014 will be notified in due course of the quantum of the adjustment to the exercise price of the Warrants 2008/2018.
YTLP Q2 result EPS = 3.82, about 8.5% increase than corresponding period.
Based on YTLP result released today, its mobile division should breakeven or even post small profit in coming quarter
The condition is same as previous adjustment in exercise price
The previous is share dividend 1:40
Adjusted warrant conversion price = [(C-D)/C] x RM 1.25
C= current share price, preceding to date of the announcement, 1.77
D= share dividend ratio x current share price, 0.0443
Adjusted warrant conversion 1.2187
Actual adjustment is 4sen to 1.21
The current share dividend 1:20
Adjusted warrant conversion price = [(C-D)/C] x RM 1.21
C= current share price, preceding to date of the announcement, 1.70
D= share dividend ratio x current share price, 0.085
Adjusted warrant conversion 1.1495
Actual adjustment is 7sen to 1.14
Remark: The adjusted warrant conversion 1.1495, but according to Deed poll, any adjustment to the warrant exercise price will be rounded down to the nearest one sen, which mean the actual adjusted price will be 1.14
CMMT - bought 1.33
SUNREIT - bought 1.28
YTL - Sold at 1.62
Thanks hng. ^^
I will try to buy YTLP this time round. I think YTLP is a better bet then YTLP-WB judging that WB premium is quite high at 5%. ^^
Hope able to grab low tomorrow. ^^
If can't grab YTLP, then will have to grab YTLP-WB. ^^
Good Luck all. ^^
share dividend benefit both ytlp & wb. better choice than cancellation.
1. ytlp shareholders get more shares
2. wb exercise price get adjusted
3. treasury shares get reduce 5% instead of 3.5% (cancel) higher margin
4. sbb got higher margin to exercise
5. first good news to both ytlp & wb
A. Impact on Yeoh stake
There is difference between share dividend and cancellation on Yeoh stake, in which Yeoh effective stake is increase higher more in cancellation compared to share dividend. This is because the total number of share is reduce in cancellation compared to share volume redistribute back in share dividend. However, as long as sbb continue, Yeoh stake will also gradually growth in tandem
2. Impact on share price
The share dividend have more positive impact on share price compared with share cancellation. As shareholder is rewarded additional free share in short term compared to cancellation which have longer term impact on EPS. Fund manager and analyst will prefer share dividend than cancellation, and share price likely subject to re-rating as share dividend indirectly give to dividend yield and YTLP will perceived as high yield stock which can command higher valuatio
1MBD replaces auditors, gets time extension to submit accounts
......................... On another matter in relation to 1MDB, the Govern-ment said that it had yet to award the 2,000 megawatt coal-fired power plant project called Project 3B.
The Energy, Green Technology and Water Ministry in a statement dismissed talk on 1MDB being awarded the project as “baseless and mere speculation.”
The ministry said the Energy Commission would make an announcement soon on the award. “The process is transparent in line with the competitive bidding system that has been put in place for the bidding of projects by independent power producers, which is to ensure, among others, fairness and competitiveness,” it added.
1MDB is in a neck-and-neck race with YTL Power International Bhd for the rights to build the power plant, with its bid marginally higher at 25.65 sen per kWh as compared with YTL Power’s bid at 25.23 sen per kWh
MP: Is 1MDB power award a 'backdoor bailout'?
Is the reported award of a coal-fired power plant to uncompetitive bidder 1Malaysia Development Bhd (1MDB) a "backdoor bailout for the financially-stricken company", asks Petaling Jaya Utara MP Tony Pua.
Citing a report in The Edge Weekly that 1MDB was apparently mired in "multi-billion ringgit loans" from its various high-cost acquisitions, Pua said: "It does not take a financial genius to wonder how 1MDB will be able to repay the principal on these multi-billion ringgit loans."
He asked whether this was the impetus behind the award of Project 3B, a 2,000MW greenfield coal-fired power plant, to 1MDB despite its bid being higher than others, and despite the Energy Commission's technical evaluation committee recommending the YTL Power bid.
'1MDB pursues reckless acquisition strategy'
"Therefore it seems to be the strategy for Prime Minister Najib Abdul Razak's administration to award a new independent power producer (IPP) concession to 1MDB, even if it means higher electricity costs for the man-on-the-street, in order to bailout the debt-stricken company and cover up, to some extent, its massive deficits," he said.
Pua said 1MDB has since 2012 "pursued a reckless acquisition strategy to takeover independent power producers with expiring contracts at very high premiums, financed almost entirely with loans".
These include the acquisition of Tanjong Energy Sdn Bhd for RM8.5 billion, Genting Sanyen for RM2.35 billion and Jimah power plant for RM1.2 billion, all costing a total of RM12.05 billion.
"However, as reported in the latest issue of The Edge Weekly, the cashflow generated by these acquisitions barely covers the annual RM650 million interest expense to finance the loans 1MDB took."
Ministry: Awarding of plant not started yet
Yesterday the Ministry of Energy, Green Technology and Water denied in a statement the award of the coal-fired power plant to 1MDB and it went on to call Pua's earlier statements "baseless and mere speculation".
According to Bernama, the ministry said the awarding of the contract for the plant has not started yet and would be announced "in due course".
"The process is transparent, in line with the competitive bidding system that has been put in place for the bidding of projects by IPPs, which is to ensure, among others, fairness and competitiveness," the Energy Ministry is reported as saying.
It said the plant is expected to start commercial operations on Oct 17, 2017.
Tenaga-China National Machinery Import & Export Corp is one of the five bidders, alongside 1MDB-Mitsui & Co, Formis Resources, YTL Power International and Malakoff Corporation Bhd.
Despite the Energy Ministry's denial of the award to 1MDB, Pua pointed out today that “The Edge clearly has information” to the contrary.
He added: “I am not only ready to be proven wrong, I also hope that I am wrong in thinking that the prime minister will prioritise the bailing out of 1MDB against lower cost of electricity to ordinary Malaysians.:
NO ORDINARY DELAY! 1MDB's late accounts puts spotlight on Cayman Islands deal - Tony
Written by Tony Pua
1MDB’s change of auditors from KPMG to Deloitte Malaysia is no ordinary change
After the expose I made last week with regards to the change of auditors for 1MDB, the company has confirmed in its statement on 21st February that it had appointed Deloitte, a Big 4 accounting firm, to complete the audit for the year ended 31st March, 2013, saying this was done after "it was mutually agreed with KPMG that the firm would cease to be 1MDB’s auditors."
Contrary to being accused of a suspicious move, 1MDB argued that "This is nothing special or new as it is in line with best market practice where companies decide on its current or future auditors after considering all aspects, including but not limited to conflict of interests and other consideration".
1MDB could not be more wrong, or we could perhaps forgive its management of attempting to make light of a very bad situation. There is no “best practice” in this world which says that it is perfectly normal to suddenly change auditors long after the accounts were overdue. Had the change been made well before the end of 1MDB financial year Mar 2013, there would have been little for us to question the company.
No ordinary delay
However, when the accounts are significantly delayed by nearly a year, and the auditor quits before it gets finalised, then surely every rakyat has the right to ask for an honest explanation. For example, why couldn’t the change of auditors be done only for the Mar 2014 accounts?
The irony is, the Managing Partner of Deloitte, Mr Tan Theng Hooi himself cited (The Star 2/8/2012) that the "failure to release financials on time is not acceptable and may indicate there could be unresolved accounting, management or other issues in hand”, when criticisng public listed companies for late publication of financial statements.
In Malaysia, as well as in countries like the United States, public listed companies are given only 6-8 weeks to report their quarterly accounts. While 1MDB isn’t a listed company, it is a sovereign wealth fund which is of even greater public importance, and it is only required to file its reports once a year! And yet, despite the appointment of KPMG, a top international accounting firm, it is overdue on its financial report by nearly a year.
1MDB gave the excuse that “its new business direction has helped it grown exponentially, requiring consolidation of new subsidiaries into the group” and hence the delay in its accounts. The excuse does not hold water because its acquisitions were not any more complicated than many carried out by some of our largest companies on the stock exchange – such as the Sime Darby acquisition of Guthrie and Golden Hope Plantations. And yet, these companies were able to finalise their accounts in a time manner in accordance to the stringent rules set by Bursa Malaysia.
Why go in when borrowing costs were so much higher than the returns
1MDB’s own response showed Cayman Islands “investment” doesn’t make any financial sense when the cost of borrowing is higher than the returns on investment!
In the same 21st February response to my earlier criticisms, 1MDB also defended its mysterious US$2.32 billion “investment” in Cayman Islands.
1MDB said it had “invested the proceeds with regulated and licensed international fund managers. These fund managers adopt an absolute return strategy of which the primary investment objective is to achieve long-term capital appreciation and/or steady income through investments in listed and/or unlisted companies".
"A total of US$200 million (RM658.9 million) has been remitted from the fund to the 1MDB group in Malaysia to service repayment. Out of this, US$134 million (RM430 million) is from the 5.76% cash dividend generated within the 1st year of the investment period.”
I’d like to thank 1MDB for highlighting the fact that it has received a 5.76% return in its first year of investment in the unnamed Cayman Island fund manager. Under normal circumstances, the 5.76% return may look acceptable, albeit a little mediocre. However, these are not normal circumstances.
The reason why the US$2.32 billion was invested in Cayman Islands in the first place is because 1MDB terminated and redeemed its 11-year loan to Petrosaudi International Limited in 2012, when the multi-part loans were to mostly mature in the year 2021. The loan to Petrosaudi, in the form of “Murabaha notes” commanded a guaranteed fixed interest (“profit rate”) of 8.67% per annum.
Hence it must be asked, why did 1MDB redeem its loan earning a guaranteed fixed return of 8.67% and invest in a fund manager in Cayman Islands which it refuses to name, giving a return of only 5.76%? Does that make any financial sense?
However, even if we were to ignore the fact that the Murabaha Notes were paying a very profitable 8.67%, it must be reminded that 1MDB borrowed all the money used to make the above investments.
The bulk of 1MDB’s borrowings for the above investments were raised in 2009 via an Islamic loan facility “sukuk” where 1MDB had to pay 5.75% interest (“coupon rate”). In lay man’s terms, this means that 1MDB is borrowing money at 5.75% interest to invest in an anonymous Cayman Islands fund which gave a return of 5.76%! Does that make any financial sense?
Worse, 1MDB had offered the above sukuk at a massive 12% discount – meaning it only received RM87.92 in loan funds, for every RM100 it borrowed. But 1MDB has to pay 5.75% interest on the full RM100. Hence the effective interest rate payable by 1MDB for the sukuk is 6.71%. In lay man’s terms, this means that 1MDB is borrowing money at an effective interest of 6.71% to invest in an anonymous Cayman Islands fund which gave a return of 5.76%. What a fantastic investment strategy!
I look forward to being lectured by any fund manager who can justify the above 1MDB tailor-made investment strategy. The rational thing for 1MDB to do, which it must do, to avoid further embarrassing losses for the rakyat, is for the company to withdraw the funds from this Cayman Island fund-or-fund-manager-which-cannot-not-be-named to pay-off its sukuk debt, guaranteed by the Federal Government, costing 6.71% per annum.
Otherwise, the rakyat is forced to speculate if this mysterious US$2.32 billion investment in the secretive Cayman Island fund was the reason why "it was mutually agreed with KPMG that the firm would cease to be 1MDB’s auditors."
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