Sembcorp Marine Rights Issue - What to do?
I have 3 options:
- do nothing
- sell the rights
- subscribe
1. Do Nothing
There is no cash outlay but if I let the rights lapse I will then see my stake diluted when the exercise is completed.
2. Sell the rights
I can sell their rights in the market, so this option results in cash inflow.
The rights appear on the Singapore Exchange's website as "Sembcorp Marine R".
As the rights have an expiry date, the value of the rights will fall closer to the expiry date.
3. Subscribe
This involves cash outflow and would entail paying SMM S$1 to get five new shares for each share currently held.
This option would be suitable if I have faith in SMM's long-term future.
Which should I choose?
I want liquid cash to buy other stocks. So maybe I should sell the rights. In that case I must subscribe first!
It might not be a good idea to throw good money after bad. Shareholders may wish to think twice before subscribing to SMM’s rights issue... https://sg.finance.yahoo.com/news/investors-subscribe-sembcorp-marine-rights-100014187.html
Price:
5 for 1 at S$0.20 per share
Timeline and dates:
| Lodgment of the Offer Information Statement and accompanying application forms with the MAS: | Friday, 14 August 2020 |
| Record Date: | Friday, 14 August 2020 at 5.00 p.m. |
| Despatch of the Offer Information Statement (together with the ARE or the PAL, as the case may be) to Entitled Shareholders: | Wednesday, 19 August 2020 |
| Commencement of trading of Rights: | Wednesday, 19 August 2020 |
| First date and time for acceptance of and payment for the Rights Shares and/or applications and payment for Excess Rights Shares(1): | Wednesday, 19 August 2020 (9.00 a.m. for Electronic Applications through ATMs of the Participating Banks) |
| Last date and time for splitting and trading of Rights: | Thursday, 27 August 2020 at 5.00 p.m. |
| Last date and time for acceptance of and payment for Rights Shares and/or applications and payment for Excess Rights Shares(1), (2) | Wednesday, 2 September 2020 at 5.00 p.m. (9.30 p.m. for Electronic Applications through ATMs of the Participating Banks) |
| Last date and time for renunciation of and payment for Rights Shares(1), (2) | Wednesday, 2 September 2020 at 5.00 p.m. (9.30 p.m. for Electronic Applications through ATMs of the Participating Banks) |
| Expected date of issuance of Rights Shares: | Friday, 11 September 2020 |
| Expected date of commencement of trading of Rights Shares: | Friday, 11 September 2020 |
Sembcorp Marine ex-rights tomorrow. Is there an arbitrage opportunity?
Posted by RT | Aug 12, 2020 |... https://newacademyoffinance.com/sembcorp-marine-ex-rights/
Source:
- https://thesmartinvestor.com.sg/should-investors-subscribe-to-sembcorp-marines-rights-issue/
The rookie trader journal
PS:
Update 1 September 2020...
The final decision is not to buy the Sembcorp Marine rights. Why? The future for this stock (and the industry) is too bleak, both short and long term.
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