CDL HTrust has announced that they are issuing rights and price has dropped slightly. I have observed that even good companies prices tends to drop when they announce rights issue. Last rights issue being Ascott Reits, and I speculate that CDLHT may follow the same price pattern. It may be an opportunity to accumulate some CDLHT at a slight discount.
- 20 rights share at $1.28 for every 100 CDLHT shares
- Existing gearing is 36.8%. After purchase of Pullman Hotel, the gearing will be 42.6%. After the rights issue, the new gearing will be 33.6%.
- Please go through the following pdf fully before any purchase: http://infopub.sgx.com/FileOpen/4_Presentation_Acquisition_of_Pullman_Hotel_Munich_and_Launch_of_Rights_Issue.ashx?App=Announcement&FileID=459148 and their press release http://infopub.sgx.com/FileOpen/3_PressRelease_%20Acquisition_of_Pullman_Hotel_Munich_and_Launch_of_Rights_Issue.ashx?App=Announcement&FileID=459147
I estimate the price of CDLHT 3 Jul Mon 9am (Cun-Rights) should be about 4% lower than price on 30 Jun Fri 5pm.
If you own CDLHT shares currenly, you should apply for all rights entitlements and also apply for as many excess rights you can afford. Current price is $1.635, getting the excess rights at $1.28 is quite a good discount.
3 ways to participate if you do own CDLHT :
- Buy CDLHT shares before 30 Jun Fri 5pm. Apply for all rights entitlements and apply for as many excess rights you can afford.
- Buy the rights shares from 10 Jul Mon 9am to 18 Jul Tue 5pm. Make sure you pay for the rights before 24 July 5pm, else the rights you bought are useless.
- Buy CDLHT shares after 3 Jul Mon 9am. The shares are likely to be volatile in month of July. Better to try to buy at the lower end of the range.
The 3rd way is the easiest, while the 1st way may be able to make the most profit because of the excess rights. The 2nd way is not recommended as it is easy to miss the payment and thus voiding your rights.
I have summarized their timeline here:
- Last day of Cum-Rights : 30 Jun Fri 5pm
- Ex-Rights : 3 Jul Mon 9am
- Trading of rights : 10 Jul Mon 9am to 18 Jul Tue 5pm
- Last date for payment and acceptance of rights : 24 Jul Mon 5pm
- Expected date that new shares in account : 2 Aug Wed 9am