With the issuance of rights, DPS will fall from 6.55 cents to 5.38 cents. The DPS Yield will fall from 8.6% to 7.6%.
I asked myself the following 3 questions below previously in my post here (OUE Hospitality Trust Issues Rights to Fund Acquisition of Crowne Plaza Changi Airport Extension).
- As issuance of rights usually dilute the share price, what will be the fair price after rights issue? This is similar to the recent ARA rights issue whereby the share price fell from estimate $1.17 to $1.05 after rights issue.
- How do I subscribe for the rights?
- How do I or should I subscribe for excess rights?
As issuance of rights usually dilute the share price, what will be the fair price after rights issue?
I found out what I am asking is actually known as TERP (Theoretical ex-rights price). TERP is the calculated price for a company’s stock shares after issuing new rights-shares with the assumption that all the newly issued shares are taken up by the existing shareholders. The TERP price is S$0.7092.
How do I subscribe for the rights?
The easiest way is to apply via ATM (Automated Teller Machine).
- Click on More Services.
- Look for the menu item whereby it says something about “Rights application”.
- Select OUE HTrust Rights.
- Enter the maximum number of rights you wish to receive. Click Enter.
- Enter the excess rights you wish to receive.
- That is it!
The fifth person has an excellent step by step guide here. (A Step-By-Step Guide How to Apply for Rights Shares by ATM).
How do I or should I subscribe for excess rights?
I have shown you above how to apply for excess rights. I have applied for OUE HTrust excess rights as well. At an issue price of S$0.54, it is selling at 23.9% discount as compared to TERP and 29.4% discount if you compare to closing price of S$0.765 as per 7th March 2016.