BRC Asia

[valuebuddies]

I trust that most of us in this forum understand the difference between convertible bonds and equity, so there is no point to argue on the pros and cons. But if the bond issue is something positive to the shareholders, wouldn't the share price increased after the announcement?

And see below as quoted from the 2013 AR:

The Group’s exposure to market interest rates arises from its term bank loan which bears interest at 1.35% above SIBOR.

Also considering that it has S$19M cash as of March 2014 and gearing not at excessive high level, why would the company so desperately seeking financing at a rate of more than twice of what it normally pay?

The only answer that I can give is:

There is this group of interested investors, some maybe related to each other or other major shareholders, who like to invest in BRC. However, they are also wary of the current market situation. So, the best way for them to start investing in the company is to issue them convertible bonds, as they refuse to take in the shares. As they are buying in bulk, as usual, the company offer them a discount on the conversion price. So now, the company is happy, as they have some big investors in the company, and the investors are happy that they invested in the company. Win-win for them. So... who are the losers?

$500,000 big? I think there are many more retail investors with similar purchasing powers, but why they are not given chance in the first place. Do you mean that any retail investor could write in to request for 5% bond issue convertible at a discount price if they have $500,000 or more to invest?

Obviously, I don't have such amount of money, my average holding per company is only 4 digits