Wednesday, 1 February 2012
Tambun: Rights Shares & Free Warrants
Tambun indah recently proposed rights issue with free warrant together with employees' share option scheme (ESOS).
It will offer 88,400,000 Rights Shares at an indicative issue price of RM0.50 together with 44,200,000 new free detachable Warrants on the basis of two (2) Rights Shares and one (1) free Warrant for every five (5) existing Shares in Tambun Indah held on the Entitlement Date.
After the rights issue and full exercise of warrants and ESOS, Tambun Indah's outstanding shares will increase from current 221 million to 371.28 million, a 68% increase with significant dilution of EPS.
The fund raised from such exercise will be used to fund several projects in Penang such as Bandar Tasek Mutiara (Pearl City), Carissa Villas, Kelisa Residence, New Juru Industrial Park and Straits Garden (Jelutong). Pearl Residence, another residential project in Pearl City, is estimated to be launched soon after the success of Pearl garden, Pearl Villa and Pearl Indah. Carissa Villas is a gated & guarded residential development with 42 units of 3 storey terrace houses at Bagan Lallang, Butterwoth.
Kelisa Residence at Seberang Jaya
Bandar Tasek Mutiara (Pearl City) township (a mixed residential and commercial development) will be developed in phases over a ten (10)-year period with an estimated gross development value (“GDV”) of over RM2.0 billion. The Carissa Villas, Kelisa Residence, New Juru Industrial Park and Straits Garden has an estimated GDV of RM41 million, RM39 million, RM36 million and RM180 million, respectively. The Carissa Villas, Kelisa Residence and New Juru Industrial Park will be developed in phases over a two (2) year period and the Straits Garden will be developed in phases over a three (3)-year period.
If the raised fund is used wisely to increase its profit, then the rights issue is good. If not, then the dilution may make the stock less attractive.