Hyflux

[D123]

of course it will be over-subscribed. much better a deal than common share.

if I had common share, I would dump at least half of it and buy the pref share.

Why so?

The way I see this preference share issue is that it is akin to a junior bond, in that its claims on assets and payouts are subordinate to senior bonds, but superior to shareholders. I'm not sure if coupons on senior bonds are cumulative, but I would assume so. No preference shareholders should be paid unless senior bondholders are paid first.

Common shareholders rank last in event of a liquidation but they get to participate in the equity upside of the company. So it's not really comparing apples to apples is it?

I don't think an issue of preference shares at 6% coupon rate by itself can make the common share unattractive.

Of course, the common share could have been unattractive in the first place, based on an appraisal of the company regardless of whether there was any issue of preference shares.