Monday, 28 August 2017

Aeon Credit ICULS

Some notes extracted from a blog.


my understanding of iculs is a kind of loan. after the expired, it will automatically convert to common share, by the fixed convertion rate. 
1st time subcrip of right 2000LA with cost RM2000, it is equal to 181.98 shares 3yrs later. 
After 3yrs, 181.98shares will credit to your account. No need to pay rm10.99 for convertion


you can buy the ICULS because it is 2 for 1 share, mean if you have 100 units share you can buy 200 units ICULS, and it is round number lot. After that you have 3 years time to sell the ICULS at anytime if you don't convert them to share. If you convert to share, you may have odd lot.


For those who dont understand why share price drop from 12.80 to 12.52, I will show you the calculation 

for example if you have 
109900 units of AEONCR you will be entitled 219800 units of AEONCR-LR,219800 units of AEONCR-LR can be converted to 20000 units of AEONCR 

so today open price=(109900*12.8+109900*2)/(109900+20000)=12.52


To subscribe the Iculs is a form of hedging on future price increase; much the same as airline's forward purchase of their fuel requirement. Of course the outcome can go either way. One pays RM 10.99 + RM 1.00 to lock in the mother share's price 3 years down the road. In view of the potential of Aeoncr, it is a portfolio worth locking in.


We get LR (right) now. We can then buy LA (ICULS) with RM1 each. After we have LA, we have option to convert this LA to mother share (no cash involved) anytime from day 1 to 3 years time. After 3 years, all remaining LA will auto convert to mother share. 

LR or later LA most probably will have premium (over price) because these financial derivatives have gearing ratio to their mother share. For instance you can now see the Aeoncr rose from RM12.44 to RM12.60 (+1.2%), but the Aeoncr-LR has risen from RM0.13 to RM0.20 (+53.8%). So over price is acceptable in this case.


You don't pay rm10.99+rm1 for the share. You subscribe to the ICULS at rm1 and you can convert 10.99 of your ICULS to the mother share when you like from issued date to 3 years time.


Aeoncr-LR is not the same as aeoncr-LA(loan stock) , a lot of ppl kind of confused here. The aeoncr-LR is a right for you to exercise to buy aeoncr-LA and will expiring on 28-8-17, the Aeoncr-LR of what existing aeoncr shareholder received will become worthless after 28-8-17. For those who exercise their right and pay to buy Aeoncr-LA. You will receive Aeoncr-La after ceasation of the right and you have another right to convert your loan stock to the mother shares at 10.99 anytime within 3 years (or mandatory conversion on the end of 3rd year) with no conversion fee as you already pay to exercise your right before.

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