Thursday, June 18, 2015

KrisEnergy 42-for-100 rights issue:

KrisEnergy has called for cash. The company will issue 42 rights share for every 100 existing share at an issue price of SGD 0.385, representing a discount of 13.5% to its closing price when the announcement was made.

I can use my existing cash reserves to subscribe to the rights issue. I am entitled to 8,400 rights shares based on my current shareholding. But I am also in the red with my average purchase price 10 cents lower than the current market price. This would mean that should I subscribe to my entitlement, I would be putting in more capital at a time where markets are generally skittish, if not heading for the inevitable slump. At the same time, the oil and gas market looks with weak, with a recovery at least 1-2 years out. Russian bear.

Notwithstanding my vested interest, generally, I would not subscribe to rights issue because companies that do call for cash, tend to underperform the market, even after adjusting for dilution. I have only participated in one rights issue, that of GMG Global, and am still waiting for my super-sized returns after many years.

Having said that, I am very likely to subscribe to the rights issue because the alternative would mean either dilution or taking a hit by selling my shares. I will update on any future action.


  1. Hi, in the same position as you (in red with 10c), thinking hard if should go for rights issue ;x

  2. I think if we were to buy in, we may and will have to wait for a long time to recover any of our initial and expanded capital. How big is your stake in krisenergy?

    1. Very small compared to yours haha. Yes, I looked at the numbers and decided it's not worth the wait so I divested at 44c last Friday. Also because I am rebalancing my portfolio and I feel it doesn't fit my profile so might as well.... -.-