Chartered Rights Issue (pdf)
Chartered Semiconductor Manufacturing (CSM) announced yesterday that they would be raising approximately US$300 million from a rights issue. Existing shareholders (as well as ADS holders) will be able to subscribe for 27 new Chartered shares at a price of S$0.07 for every 10 Chartered shares that they own.
The last traded price of Chartered was S$0.20 so the theoretical ex-rights price works out to be S$0.1065.
Singapore Technology Semiconductor (STS), a wholly owned subsidiary of Temasek Holdings, will take up its entire 59.36% of the rights. In addition, it will be on standby to take up any excess rights (up to 90% of total shares) not taken up by other shareholders.
Key dates are as follows:
Shares trade ex-rights: 16th March 2009 from 9am
Despatch of offer document: 23rd March 2009
Commencement of trading of Rights : 23rd March 2009 at 9am
Last day of trading of rights: 31st March 2009 at 5pm
Last day and time for acceptance and payment for Rights Shares and excess Rights Shares: 6th April 2009 at 5pm (930pm for electronic)
Expected date of trading of Rights Shares : 16th April 2009
The rights offer document can be found here:
Chartered shareholders would have the following options.
Assuming someone bought 10000 shares of Chartered at $0.20 (total cost $2000)
Option 1 (Subscribe for own rights)
Subscribe for 27000 rights shares at $0.07 each (total $1890)
Average cost of 37000 shares = $0.105
Option 2 (Subscribe for own rights and excess rights)
Note that priority for excess rights will be given to the rounding of odd lots. Other than that, all shareholders will be given the same priority. This is unlike the Capitaland rights issue where the substantial shareholders were given the least priority. So, the likelyhood of getting excess rights will be lesser. This would of course be affected by the demand and trading price of Chartered shares after this rights announcement.
Subscribe for 27000 rights share at $0.07 each (total $1890)
Subscribe for (say) 3000 excess rights share at $0.07 each (total $210)
Average cost of 40000 shares is $0.1025
Option 3 (sell off rights)
Assuming price of Chartered is at $0.105 after ex-rights.
Sell off 27000 rights at $0.035 each ($945)
Average cost of 10000 shares is $0.1055
Option 4 (Do nothing)
Average cost of 10000 shares remains at $0.20 (no change)
Option 4 is the sure lose option unless the the trading price of Chartered actually falls below S$0.07. In which case Singapore Technology Semiconductor will probably end up taking up most of the rights shares.
Chartered Share Consolidation
Following the rights exercise, Chartered will also be looking to do a share consolidation exercise of 10 shares into 1. This will have to be approved at a shareholders meeting.