Jaks had announced the details of its warrants subscription. You may refer to the announcement here:
http://www.bursamalaysia.com/market/listed-companies/company-announcements/6005573
Subsequent to the listing of Jaks' renounceable rights issue of warrants (Jaks-WR), Jaks' share price had crumbled from 82 sen (being the closing share price on the day before listing of Jaks-WR) to 49 sen (being closing share price on the last day of acceptance and payment for the warrants). This 40% fall in share price had rendered the warrants unattractive to entitled shareholders as each warrant costs 25 sen with an exercise price of 64 sen.
The clear winner of this warrant issuance exercise is CEO Andy Ang. I am of the opinion that this warrant issuance exercise is in no way a true fund raising exercise. It is an exercise to serve AA's personal purposes.
#1. AA had successfully forced KYY to exit Jaks
#2. AA had cleverly timed this warrant issuance exercise expecting KYY to sell his shares in the open market thus driving Jaks' share price down. AA needed this share price fall to happen to ensure a low subscription of the warrants. And indeed he had achieved that with a subscription rate of 37.52%.
#3. Assuming full conversion of the warrants in the future, AA will increase his percentage shareholding at a relatively cheap entry cost of 25 sen per share. Here is how it is done:
Total number of Jaks' issued shares = 545,943,372
Total number of Jaks' shares held by Andy Ang = 49,654,102 (latest disclosure dated 13 June 2018) i.e. 9.10% shareholding
Number of Jaks' warrants entitled for subscription by Andy Ang = 24,827,051 (disclosures dated 23 November 2018 and 29 November 2018 indicating that he did not dispose any Jaks-WR)
Assuming that all warrants subscribed are exercised in the future, the total number of Jaks' issued shares will increase to 648,371,802 shares. Post warrant exercise, this will increase Andy Ang's shareholding to 74,481,153 shares representing an effective shareholding of 11.49%.
(Note: The above numbers are based on disclosures made by Andy Ang on shares held in his name only. It is possible that he has more shareholding held in the names of nominees).
The 2nd winner of this warrant issuance exercise are shareholders who never had the intention to subscribe to their entitled warrants. A relatively low subscription rate of the warrants translates to a significantly lesser dilution effect. Here is a simple calculation based on a minority shareholder's shareholding of 1,000,000 shares or 0.183% shareholding.
Had the warrant subscription rate been 90%, the enlarged number of issued shares (assuming full exercise of warrants) will be 791,617,889 shares. The 1,000,0000 shares held will now represent only 0.126% shareholding. That's a dilution of 31.1%.
Now that the warrant subscription rate is only 37.52%, the potential enlarged number of issued shares is 648,371,802 shares. The 1,000,000 shares held will now represent 0.154% shareholding. The worst case scenario potential dilution is now only 15.8%.
https://klse.i3investor.com/blogs/financialpedia/186535.jsp
