Martin Lee @ Sg
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United Engineers Convertible Bonds

I received a question on the convertible bonds that will be issued by United Engineers. 

  1. Can check with you after I subscribe to the convertable bonds through ATM, does it means I can require to convert to the UE shares anytime? 
  2. If I don’t convert it, it means they will pay me back $3000 at the end of 3 yrs right since the expiry date is 3 yrs and my allocation is 3000 UE bonds, correct? 

For ease of reference, I have uploaded the offer information statement here:

United Engineers Convertible Bond Offer Information Statement

1) According to the OIS, bondholders have the right to convert the convertible bonds into shares any time before the deadline which is seven days before the maturity of the bonds.

The number of shares to be issued will be the face value of the bonds divided by the conversion price, $1.34. This conversion price might change due to certain corporate events so it is a good idea to double check before doing any conversion in the future.

2) Actually, the bonds have a maturity date 5 years (and not 3 years) from the issue date. As long as the company does not go bankrupt before that, you will get back 100% of your principal amount.

Note that there are also some scenarios where the company has the option to redeem the bonds early.

Some Key Dates:

The last day for acceptance and payment of the convertible bonds is 23rd Feb 2009.

The bonds will start trading on SGX on 5th Mar 2009.

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2 comments
Intheknow says 10 years ago

Hi All,

The Convertible Bond is paying 1% p.a. interest ONLY!

who in the right mind will want to subscribe to this?

the strike price to convert is at $1.34 which is above the current trading price.

i don’t see ANY reason for this to be even slightly attractive! please enlighten me!

Regards,
Intheknow

Reply
    lioninvestor says 10 years ago

    I suppose this might appeal to someone who is positive about United Engineers in the long term but wants a safety buffer of (some) principal protection in case he is wrong.

    Of course, at current times, there are better deals around.

    Reply
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