P.S. if you are here for information on Sembcorp Marine’s 2021 Rights Issue, here’s the latest update.
The Sembcorp Marine rights will be trading on SGX today (19 Aug 2020).
There are at least 3 options you can consider. Regardless which you choose, you MUST ACT.
Please don’t repeat the SIA renounceable rights and MCBs episode previously.
If you need more information, you can refer to this where we explained what Sembcorp Marine and Sembcorp Industries wanted to do. Here’re the relevant documents from Sembcorp Marine about the offer.
To make it easier for you, these are your possible options:
Option 1: Sell
These are renounceable rights which means they will be traded on SGX. You can choose to sell them instead of paying to convert them to shares.
My guess is that the initial price would be close to $0.02 since Sembcorp Marine closed at $0.22 and the conversion price is $0.20 for each right. But of course the prices are subjected to changes due to market forces and perceptions.
Update 20 Aug 2020: Given that the rights are trading at $0.002, it might not make sense to sell if you have too little rights because you have to pay minimum commission. For example, the proceeds would be $20 after selling 10,000 rights. But commission can be $25 for the transaction. You end up worse off.
How many rights will you have?
You get 5 rights for every share you own. Simply multiply the Number of Share you own by 5 to get the number of rights you have.
You can also login to your CDP account or refer to your broker’s letter (if you held the shares in a custodian account) to confirm the number.
Who should consider selling?
You should sell if you have NO intention to subscribe the rights.
At least you get back some cash. Don’t let it expire.
You have until 27 August 2020 at 5.00 pm to sell them and after which the counter will be delisted. The counter is Sembcorp Marine R (SGX:THFR).
Option 2: Subscribe
You can also subscribe by paying $0.20 to convert each right to a share in Sembcorp Marine.
If you have 1,000 shares, you would be granted 5,000 rights. You can pay $1,000 to convert the rights to shares and you will end up with a total of 6,000 shares.
If you wish to subscribe, make sure you do so within the time period!
You can pay for the conversion at the ATMs (shares held in CDP) or transfer to your broker (shares held in custodian).
The acceptance of the payments and applications starts from 19 Aug 2020, 9am and ends on 2 Sep 2020, 5pm.
Option 3: Subscribe to partial rights and sell remainder
The last option is that you can subscribe to fewer rights than you were entitled.
For e.g., you have 5,000 rights but only wish to subscribe to 2,000 rights. You can pay for the 2,000 rights ($400), and SELL the remaining 3,000 rights that you want to give up.
You’ll need to take 2 actions:
- SELL the rights which you don’t wish to convert and,
- PAY for the partial rights you want to convert within the stipulated dates.
I recommend you to do both at the same time in case you forget to do one and not the other.
Option 4: Subscribe to MORE rights
You can also subscribe to more rights than what you were given.
To do so, you can either:
- BALLOT for excess rights by paying for more rights during the application, or
- BUY more Sembcorp Marine R (SGX:THFR) from the stock market.
The advantage of the former is that you don’t need to pay additional fees (above the $0.20 conversion) for the excess rights. But it is a ballot so it isn’t guaranteed you get what you applied for.
The advantage of buying the rights from the stock market is that you would definitely get the excess rights and can convert them to shares. The downside is that you have to pay extra in this process.
Important: Please Act
The worst thing you can do in this exercise is to do nothing.
You should either sell the rights or pay for them to convert to shares.
Last Warning: The rights will stop trading on 27 Aug 2020, 5pm and the last date to pay for conversion would be 2 Sep 2020, 5pm.
Decide now and act!
with today rights price, selling mean paying instead of receiving because of commission.
so no act may be better than sell.
yes. if not enough rights to sell may not be worthwhile to pay for the comms.
when the rights given, there is already commission charge
Hi Alvin, I have THFR shares (6500) which approx worth only $19.5 (consider market value $0.003). Does sell this stock require commission fee? (If used UOB kayhian brokerage account which normally commission fee more than $20+)
So do you think still worth to sell it?
Or subscribe it (pay additional) and ‘hope’ sembcorp marine company can get better?
If your proceeds are less than the commissions, of course it isn’t worthwhile to sell.
Hi Alvin
Can sell rights online like on the POEMS platform?
yes if your rights are in CDP and this POEMS account is linked to the CDP.
OR
yes if your rights are custodised by POEMS.
Hi Alvin, may I know how differently investors handle in terms of the procedures if those shares were being purchased via CPF or SRS in the first place? Can they still use CPF/SRS funds to subscribe rights or must be done in cash mode? Thank you.
You can use CPF funds if the shares were originally held in CPFIS Account, provided you have enough funds and within the 35% limit for stock investment.
Similar for SRS.
Thank you Alvin!
I have 30 lots in semb Corp marines, do I have to sell or buy 6 lots right
30,000 x 5 = 150,000 rights
Sell 150,000 @ $0.002 = $300
Subscribe 150,000 @ $0.20 = $30,000
Hi Alvin, what would be your advice in this case (150,000 rights)? Sell or subscribe for say, a mid-term investor (holding 3 to 5 years)? Thanks.
Hi Alvin,
What about those people holding SCI share? Do we need to do anything or just wait for the announcement.
you will be given SCM shares in the future. dont need to do anything
can we subsribe to it online (same as the SIA shares) as i am currently overseas
I think CDP may allow that now. You can confirm with them
Hi Alvin,
I just received the notice. I have 90,000 shares which is 450,000 rights, I want to sell the rights, pls advise how to sell?
You can sell the rights as you normally sell a stock via your broker
What do you think would most likely be the price after the rights are completed? Thanks.
I can’t tell the future!
Would it be a case of throwing in good money after bad money?
Hi Alvin,
After subscribed to the rights, when will it become actual SCM share that I can trade? (The actual scm shares, not the rights)
yes the rights will become shares after you have paid for them to convert
Hi Alvin, so the due date for subscribing to the rights is 27th or 2nd of September? You’ve mentioned both dates…
sell rights by 27 Aug
subscribe rights by 2 Sep
Actually what is the difference between having the rights to buy now or after ex-rights?
The price of Sembcorp Marine is already almost $0.20, which is the same as the “discounted” rights price of $0.20. After ex-rights, if price drops to below $0.20, it will be a nightmare for investors.
So what benefits or “rights” to buy are we talking about?
no benefits at all..nightmare
I am a SCM shareholder myself and won’t be subscribing to the rights out of concern that it may become a case of throwing in good money after bad money. I also share your concern that SCM share price may drop below $0.20 as I am worry that there may be a wave of sell-down by SCI shareholders who receive SCM shares FOC (4.xx SCM shares for 1 SCI share).
But should I wish to acquire more SCM shares to reduce the dilution to my original SCM shares, I would wait until the SCI shareholders have received their free SCM shares and started trading before making my move. The risk is of course SCM share price may rise instead of drop but it is a scenario that I feel is unlikely to happen given the huge quantity of SCM shares available for trading then. But don’t just take my word for it since I did make a (big) mistake of paying a high price for SCM shares and was not decisive enough to cut loss early 🙁
The share price has been going lower and lower, a “Submarine” indeed 🙁
Hi Alvin,
If i buy the 9 lots of SCM, S51 on 21 Aug 2020. What should i do?
Hi Alvin,
If we do nothing, will we still be holding the original shares in SMM?
As an example, if I have 1000 shares of S51, and I chose not to do anything, will I still retain the 1000 shares post- rights?
Thanks
Yes. you will still have your SCM shares
Hi Alvin what happens if i have 15000 semb marine shares? If i sell its at $0.002 x 15000??? What is your advice?
nothing will happen to your sembmarine shares. We are talking about the rights here
I am not a SCM shareholder. If I buy 10K SCM R via the open market @ $0.001 per share today 26/08/2020..
when & how do I pay the $0.20 x 10K?
You buy it like how you normally buy a stock
So what happens if we don’t sell the rights (due to commission exceeding sale) and also don’t subscribe to the rights (don’t want to invest further in a sinking ship)? SCM’s underwriter will take it back and sell to Temasek?
If other shareholders subscribe more then yes, your rights could be give to others.