Anyone buying it will exercise the rights by paying 12.5 cents to get a warrant.
So 21+12.5 cents = 32.5 cents.
The warrants will be listed in mid-Dec and probably would trade at around 40+ cents.
Reason - the strike price is 20 cents, giving a total cost of 60 cents. The mother share trades at 67 cents.
In other words, the warrants have a chance of being profitably sold in Dec: ie 40-cents - 32.5 cents = 8 cents profit.
More info for consideration:
The warrants have a lifespan of 3 years, can only be exercised at the end of the 3 year period, and the strike price is 20 cents.
Thus, one's cost to get a mother share = 32.5 cents + 20 cents = 53.5 cents.
The mother share now trades at 67 cents.
Caveats:
1. Going forward, the mother share's up or down movement will depend on the business fundamentals and have an impact on the price of the warrants, of course.
2. Technics Oil has issued a profit warning for 4QFY13 and FY13 is going to be loss-making. Weak outlook.
BNN wrote: The warrants have a lifespan of 3 years, can only be exercised at the end of the 3 year period, and the strike price is 20 cents.
Based on the circular, the exercise price of the warrant should be 25 cents and not 20 cents.
Based on the issued share capital of the Company of 224,512,706 Shares (excluding 13,000 treasury shares but including Shares represented by TDRs) as at the Latest Practicable Date, up to 89,805,082 Warrants will be issued at the Issue Price of S$0.1 25 for each Warrant to the Shareholders. Each Warrant carries the right to subscribe for one (1) New Share at the Exercise Price of S$0.250 per New Share.
Thank you ngcheeki, I missed the revision in the exercise warrant price. They had earlier announced 20 cents.
Technics Oil stock price is 66 cents. Could be depressed by shareholders selling to exercise the rights. It's the usual happening ....and also quite a no. of people nursing wounds from the 3 stocks that plunged.
Next week onwards, Technics Oil could strengthen to 70 cents?
BNN wrote: Thank you ngcheeki, I missed the revision in the exercise warrant price. They had earlier announced 20 cents.
cents?
Hi BNN, you're most welcome. Since the going-to-be listed Technics Oil&Gas warrant can only be exercise at the end of 3 years (aka European Warrant), this may be the reason of why it is traded at a discount. In the event, Technics Oil&Gas declared a fat dividend due to good/improved result, you'll not be able to exercise the warrant and benefit from the dividend. Unlike share, warrant does not receive dividend.
