Martin Lee @ Sg

Frasers Commercial Trust CPPU

Earlier in January and this month, Frasers Commercial Trust (FCOT) announced a non-renounceable sale of 116,789,400 Series A convertible perpetual preferred units (CPPU).

Existing shareholders who have FCOT registered in their CDP as at 9 February 2010 at 5.00 p.m. will be given the right to subscribe for FCOT’s Series A CPPUs on the basis of one Series A CPPU for every 20 existing Units of FCOT at the price of S$1 per Series A CPPU.

As the offer is non-renounceable, shareholders would have the option to either take up their Series A CPPU entitlement or to give it up.

Someone asked me why the price of the CPPU is more than the current share price of FCOT. This is actually not your normal Rights issue. The CPPU function more like a preferred share that entitles holders to receive a distribution of an amount equivalent to 5.50% per annum of the Offer Price.

On top of that, the CPPU can also be converted into normal FCOT units on the first Business Day of each calendar quarter at the discretion of the unit holder after 25th August 2012. The units will be converted at the conversion price of conversion price of S$0.2369 per Unit.

eg. 1000 units of CPPU bought at $1 can be converted into 4221 Units of FCOT.

Acceptances of provisional allocations of Series A CPPUs and (if applicable) applications for Excess Series A CPPU by eligible Unitholders may be made through CDP or by way of electronic applications, during the offer period commencing from 12 February 2010 to the closing date, 2 March 2010. In the allotment of Excess Series A CPPUs, preference will be given to the rounding of odd lots.

Note that the FCOT CPPU is not available under both CPF OA and SRS. Investors holding FCOT in their OA will need to contact their agent bank about taking up their entitlement using cash. Investors holding using SRS will not be entitled to participate in the Series A CPPU offering.

It should also be noted that the Series A CPPUs may not be listed and quoted on the SGX-ST for certain reasons, including but not limited to an insufficient spread of holdings of the Series A CPPUs to provide for an orderly market in the trading of the Series A CPPUs if there are fewer than 100 Series A CPPU holders.

For more information, you can refer to the Offer Information Sheet (OIS) of this FCOT CPPU offering.

FCOT OIS (9 February 2010)