Preference Shares in Malaysia – Takeover of IGB Corporation by Goldis

What are Preference Shares?

The first thing that comes to mind to most Malaysians when Preference Shares / Preferred Stocks are mentioned is dividends. We will expect a higher rate of dividends compared to Ordinary / Common Shares. However, apart from dividends, there exist several other key features contained in a Preference Share.

  1. If and when a company is insolvent, preference shareholders are entitled to be paid from assets of the company first, before ordinary shareholders;
  2. Most preference shares have a fixed (and higher) dividend rate; and
  3. Preference shareholders typically do not have voting rights.

 

IGB Corporation Berhad’s Takeover by Goldis Berhad – Free Tickets to the Show

A huge part of why I’m doing this introduction on Preference Shares is because I’m actually electing to receive Preference Shares in lieu of cash / ordinary shares when Goldis takes over IGB Corp (a company I’ve invested in).

So this is your ticket to actually see how a corporate takeover works and more importantly, join me as I take my first step into the world of Preference Shares.

I’ll of course, be updating this periodically.

A Brief Introduction

Goldis Berhad actually owns 73.40% of IGB Corp and a takeover has been on the books for a long time. A takeover offer can be made to other shareholders if you own more than 50% of a company. 

To make this easier to understand, I’ll be using my own shareholdings as an example. I own 4,000 shares of IGB Corp, bought at RM2.87 per share.

Take note that IGB Corp closed at RM2.97, the trading of shares has since been suspended. The shares of IGB Corp have been valued by Goldis at RM3.00 per share during the takeover exercise.

There are 3 ways for me, as an IGB Corp investor to cash out from this takeover.

  1. I receive 100% Cash (RM3.00 per share). I’ll receive RM12,000  in cash and make an instant gain of RM520 (A 4.5% gain)
  2. I receive 30% in Cash and 70% in Goldis Shares. I’ll receive RM3,600 in cash and 2,800 units of Goldis Shares which are going for RM3.10 per share as of today. (A 6.96% gain)
  3. I receive 12% in Cash and 88% in New Redeemable Convertible Cumulative Preference Shares (RCCPS). I’ll receive RM1,440 in cash and 3,219 units of new Preference Shares valued at RM3.28 each. (No gain)

As you may well have guessed, I opted for Option 3.

IGB Corp Goldis RCCPS
Option 3 – RCCPS (Don’t forget to affix your RM10 Revenue Stamp and enjoy the post office queue)

Details of the Preference Shares or RCCPS Scheme

Tenure: 7 years

Dividend Rate: 4.3% (semi-annual payment)

Redeemable: Goldis Berhad can purchase/buy back the preference shares from and including the 4th anniversary of the issue date up to the maturity of the 7-year period.

Convertible: 1 preference share can be converted to 1 ordinary share at any time during the 7-year period.

Cumulative: If and when there are any missed dividend payments, they are to be paid at a later date by Goldis. ie. it’ll be owing to preference shareholders until the tenure of 7 years.

 

In Summary

4.3% Dividend Rate

With the RCCPS option, I’ll receive a FIXED return of 4.3% on my 3,219 units of preference shares at RM3.28 each. That’s RM454 every year for 7 years. In contrast, Goldis Berhad’s dividend yield is less than 1% currently.

The Redemption

I will be holding onto my preference shares for a minimum of 4 years. After which, Goldis will have the option to Redeem and buy back the shares at their discretion.

This is the only part of the whole exercise that worries me as I would like to hold onto those shares for as long as I can, and at the end of it all, convert them back to ordinary Goldis Shares.

But! Historically, Goldis has not redeemed their existing RCCPS and it matures in 2020. If that’s anything to go on.

I’ll just have to keep an eye out after the 4th year for any news of redemption.

End.

I hope I’ve managed to help some of the IGB Corp investors here clear up most of the issues and queries you have regarding the whole takeover exercise.

In short, and after my analysis, the RCCPS option is the way to go. The 100% cash option is the worst, so please don’t go that route. If you want cash, go for Option 2, and sell your Goldis shares after.

If you’ve got any other questions regarding this or if I’ve made any mistakes (I’m a 100% new to this), please do get in touch in the comment section below or on Facebook.

Thank you for reading and enjoy them Preference Shares!

Bitcoin and Genesis Mining ROI in Malaysia – September & October Update

Cloud Mining on Genesis

Cloud Mining Malaysia

Genesis is back and its daily payouts are as scheduled. They have however raised their minimum payout threshold to the following:

  • Bitcoin 0.0025 BTC (was 0.0020)
  • Litecoin 0.002 LTC (was 0.001)
  • Zcash 0.001 ZEC (was 0.00005)

I’ve also increased my mining powaaa in November.

Genesis Mining Allocation Dec'17
Genesis Mining Allocation Dec’17

I’ve doubled my Bitcoin, Zcash and Monero mining rates. Also increased Ether’s. The next objective is to increase Ethereum’s mining power as I see great potential in the currency.

 

Return on Investment (ROI), This is Getting Big

Dividend Magic's Cryptocurrency Portfolio 2017
Dividend Magic’s Cryptocurrency Portfolio 2017

I have to admit that I’ve kinda lost track of my Bitcoin returns. I mine it personally on my PC as well as on Genesis. But here is my total returns for 2017.

My cryptocurrency portfolio jumped from USD171.34 in October to USD628.59 today, in a short span of 2 months. Of course, this is mainly due to the recent hype in all things crypto.

Mining of crytocurrencies started out as a small personal project for me back in July this year. I started out with USD93.20 back then on Dash contracts. I’ve not put in additional money, all of my proceeds from mining has been reinvested into more mining contracts.

I should get back my initial investment of USD93.20 from Dash contracts alone next year.

NiceHash Miner Hacked

I’m sure most here are privy to the recent hacking of NiceHash. I myself have lost a chunk of unclaimed Bitcoins from mining with them. It is frustrating but I fear I will never see those coins ever again.

 

End.

My cryptocurrency portfolio currently stands at USD628.59, fluctuating every other minute as we see the currencies swing up and down.

To those that are invested, I’d recommend ignoring the swings and focusing on real, credible news. Think logically and remember, investing is always for the long term.

To those that are interested in getting in on the action, I’d suggest:

  1. Cloud Mining – I go with Genesis
  2. Purchasing and holding onto your currencies. I use Luno (My promo code: HFCCY)
  3. If you’ve got a good PC lying around, try mining it yourself using NiceHash!

If you’re planning to purchase mining contracts with Genesis, please go ahead and key in the following code: KT7r1S which gives you a 3% discount on your purchase.

A big thank you to everyone that has been using my referral code. I’ve received many many additional hash power thanks to you.

Onwards and upwards! May the currencies swing in your favor