SembCorp Marine (SMM) right (or left?) share

Sembcorp Marine right share did not get subscribed leading to Temasek scooping them all. That’s huge capital worth $1B. The TXRP for the 5-for-1 right share issuance was calculated to be $0.31 but unfortunately theoretical remained theoretical.

The counter (SGX:THFR) on where right was trading has been lackluster as well. It was hovering between 0.1 to 0.2 cent. A sign that there was no keen party to take the dip, despite the apparent “discounted” rate if you do sign up eventually for 20cent apiece to own new SMM share.

Ex-right issue, the mother share (SGX: S51) traded at about 20cents. Therefore, those who bought the rights did not really see any incentive to subscribe. Those who were given but didn’t manage to sell on the counter, was also trapped seeing their rights gone wasted (because they did not subscribe eventually).

source: google finance
source: tradingnote

To sum up, there was no room for arbitraging the difference in cost of subscribing the right and eventual share appreciation. All “right” share are “left” unsubscribed by shareholders. New retailer might just buy the SMM share albeit the brokerage fee. The uncertainty of SMM core business and lack of clear signs of possible merger with Keppel served as possible reasons why share price plunged to where it is today.

My thought is skip this kind of right-issuance counters are you can never be sure what lies ahead of the counter. Right issuance seems attractive for the discount at first. Do your due diligence.

Published by average_investor

trained engineer by career self-learnt investor by interest

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