>90% SIA shareholders who didn't subscribe to MCB have lost a great deal.

>90% SIA shareholders who didn't subscribe to MCB have lost a great deal.

Correct price of SIA MCB now should be 10% less than equivalent SIA share price (conversion factor of 2.68 bonds to 1 SIA share) and vice versa.

That is why, based on the 6% compound interest and $4.84 conversion price (may be even lower with anti-dilution clause), the effective price of an SIA share in 10 years time, from the MCB pathway is $2.68 now.


For rights share issue, the rights conversion price is $3.

$2.68 is 89.33% of $3 or for convenience, 10% discount off the SIA share rights conversion price at the start to make it more attractive and compensate for the accumulation of interest/ dividend as the outcome prevails) .

Thus, SIA MCB and SIA shares, in a worst case scenario are essentially the same thing, since both will accrue the SAME dividend, just difference in dividend pay out time and the interest ceiling* upside to the MCB (4-6% compounded interest, depending on time of redemption). And the worst case scenario always prevails in case the MCB value is below the projected par value at the contamporaneous period (e.g. $1.1716 at 4 years, $1.6047 at year 8 etc, see redemption value chart for guidance.

Since 2.68 MCB will eventually yield one SIA share eventually, then by extension, if supposing the MCB market price is 95¢, then the equivalent SIA share market price should be = 95/100 *$2.68/0.9 = $2.828888

If the SIA share price is $4.33, then the MCB price level should be = $4.33 * 0.9/2.68= $1.4541.

Thus, it is absurd for the MCB price to be 95¢ and the SIA share to be $4.33 for example and the MCB is underpriced by 1.4541-0.95/0.95 = 53% for instance.* Or else, it is the market that has over priced the shares, which ought to be priced at = 0.95*2.68*1.10= $2.8006, or that they are 4.33-2.8006/4.33 = 35.32% over priced in this instance.

Reference:
Rights issue results (02 June 2020): https://links.sgx.com/1.0.0/corporate-announcements/626KPEFTDSPLH622/Rights%20Issue%20Results%20Announcement%20.pdf

Of the 44.5% retail SIA share investors only average 4.1% (non Temasek shareholders) accepted with payment for rights MCB (including excess rights MCB applications) . (I.e. less than 10% did so), so 90% of SIA shareholders have overlooked a great deal.