Citydev NCCPS
The MAJOR disadvantage of this NCCPS is it can be quite illiquid
and its perpetual with Conversion ONLY at the SOLE Option of Company
so Conversion: maybe within 1 or 2 years time, OR maybe only in 5-10 years time, OR even NOT within your Lifetime
NB: NCCPS was first issued on 09-Jun2004 => so it had been around for over 8 years now (as at Sep2012)
Briefly the T+C
============
its a Non-Cumculative Convertible Pref Share
a) paid max of 3.9% Pref Div per annum (i.e 3.9c per CitydevNCCPS share) - half in Jun & half in Dec each year
b) Timeline is Perpetual - so no maturity
c) Conversion is ONLY at SOLE Option of Company
...I believe Controlling shareholders also got a big chunk (my guesstimate ~ 32%) - so there's alignment of interests
d) Conversion Term :
each NCCPS convert to 0.136 Citydev ord shr + an Additional Pref Div of $0.64 net cash
===> so upon Company's trigger Conversion:-
one NCCPS converts into ==> 0.136 Citydev ord share + $0.64 net cash
1000 NCCPS converts into ==> 136 Citydev ord share + $640 cash
So upon Company Trigger Conversion, the returns could be v. attractive... esp if Citydev Ordshr price is trading at much higher than $5
Examples
=========
1) using 28sep2012 closing prices: CityDev Ordshr=$11.74 / Citydev NCCPS=$1.11
Effective Yields per NCCPS is 3.9c/$1.11 = 3.51% p.a. (higher than current CPF OA rate of 2.5% )
Potential values per NCCPS upon a Company trigger conversion = 0.136*$11.74 + $0.64 = $2.237 !!!
that's double the current NCCPS price of $1.11 each !!
2) Now if we assume Citydev ORdshr price CRASHED to only $5
Potential conversion values for each NCCPS = (0.136*$5.00 + $0.64) ==> still worth $1.32 per NCCPS !
NB: total NCCPS in issue = 331m,
so new Citydev ordshrs upon NCCPS conversion is 44.99m - less than 5% of current Citydev Iss shrs
==> so dilutive impact not a big issue
attractive for those using CPF OA funds - if YOU have NO NEED to utilise your CPF funds at short notice (eg still servicing home mortgages)
i) coz the annual 3.9% Pref Div rate of NCCPS,
at CitydevNCCPS curr price of $1.11 , eff. yields=3.9c/$1.11=3.51% p.a
=> its higher than CPF OA rate at 2.5% and still got potential for capital gains upon NCCPS conversion
Some Stats : Annual servicing costs to Company - for annual Pref dividend payouts
==============
Issued NCCPs = 330.874m units: At 3.9% p.a. Annual Pref dividend payout amounts to a mere $12.904m
mere peanuts to Citydev with its past 5 years' annual Revenues at around $3 Billion & PATmi around $600m~$800m p.a.
in the unlikely event that the 3.9% pref div is not payout in full for any periods
Company(Citydev) will be forbidden to declare any ordinary dividends and other restricitons eg. cannot declare bonus or conduct share buybacks
NB: So far since its issue in Jun2004, pref div have always been paid in full every years.
The MAJOR disadvantage of this NCCPS is it can be quite illiquid
and its perpetual with Conversion ONLY at the SOLE Option of Company
so Conversion: maybe within 1 or 2 years time, OR maybe only in 5-10 years time, OR even NOT within your Lifetime
NB: NCCPS was first issued on 09-Jun2004 => so it had been around for over 8 years now (as at Sep2012)
Briefly the T+C
============
its a Non-Cumculative Convertible Pref Share
a) paid max of 3.9% Pref Div per annum (i.e 3.9c per CitydevNCCPS share) - half in Jun & half in Dec each year
b) Timeline is Perpetual - so no maturity
c) Conversion is ONLY at SOLE Option of Company
...I believe Controlling shareholders also got a big chunk (my guesstimate ~ 32%) - so there's alignment of interests
d) Conversion Term :
each NCCPS convert to 0.136 Citydev ord shr + an Additional Pref Div of $0.64 net cash
===> so upon Company's trigger Conversion:-
one NCCPS converts into ==> 0.136 Citydev ord share + $0.64 net cash
1000 NCCPS converts into ==> 136 Citydev ord share + $640 cash
So upon Company Trigger Conversion, the returns could be v. attractive... esp if Citydev Ordshr price is trading at much higher than $5
Examples
=========
1) using 28sep2012 closing prices: CityDev Ordshr=$11.74 / Citydev NCCPS=$1.11
Effective Yields per NCCPS is 3.9c/$1.11 = 3.51% p.a. (higher than current CPF OA rate of 2.5% )
Potential values per NCCPS upon a Company trigger conversion = 0.136*$11.74 + $0.64 = $2.237 !!!
that's double the current NCCPS price of $1.11 each !!
2) Now if we assume Citydev ORdshr price CRASHED to only $5
Potential conversion values for each NCCPS = (0.136*$5.00 + $0.64) ==> still worth $1.32 per NCCPS !
NB: total NCCPS in issue = 331m,
so new Citydev ordshrs upon NCCPS conversion is 44.99m - less than 5% of current Citydev Iss shrs
==> so dilutive impact not a big issue
attractive for those using CPF OA funds - if YOU have NO NEED to utilise your CPF funds at short notice (eg still servicing home mortgages)
i) coz the annual 3.9% Pref Div rate of NCCPS,
at CitydevNCCPS curr price of $1.11 , eff. yields=3.9c/$1.11=3.51% p.a
=> its higher than CPF OA rate at 2.5% and still got potential for capital gains upon NCCPS conversion
Some Stats : Annual servicing costs to Company - for annual Pref dividend payouts
==============
Issued NCCPs = 330.874m units: At 3.9% p.a. Annual Pref dividend payout amounts to a mere $12.904m
mere peanuts to Citydev with its past 5 years' annual Revenues at around $3 Billion & PATmi around $600m~$800m p.a.
in the unlikely event that the 3.9% pref div is not payout in full for any periods
Company(Citydev) will be forbidden to declare any ordinary dividends and other restricitons eg. cannot declare bonus or conduct share buybacks
NB: So far since its issue in Jun2004, pref div have always been paid in full every years.