Why need to sell MBSB warrant now?
MBSB has proposed Special dividend of RM0.18 less 25% tax, and Final dividend of RM0.09 less 25%. Total RM0.27 less 25% tax, net RM0.2025.
14/05/2013 ex date.
16/05/2013 entitlement date.
Please double check the dividend figure and date, I did not verify it.
Assuming the dividend is approved at the AGM, MBSB warrant holder can convert the warrant to MBSB mother share, and get the dividend.
However, there is a cut-off date. If warrant holder convert the warrant to mother share after the cut-off date, they will not get the dividend.
"Normally" the cut-off date is 10 working days before the entitlement date. But you need to check with the registrar.
Now MBSB stock is trading at RM0.96 to RM1.00 higher than MBSB warrant. Based on my prediction, at the cut-off date, Warrant will drop about RM0.20, and MBSB will trade at RM1.16 to RM1.20 higher than Warrant. Then at dividend ex date, MBSB share price will drop about RM0.20 and MBSB will trade at RM0.96 to RM1.00 higher than warrant, back to current level.
If I have MBSB Warrant, what shall I do now?
1) Convert warrant to MBSB mother share before cut-off date
2) Sell warrant and buy MBSB. This is more easy but more expensive because involve brokerage. Furthermore, MBSB warrant is trading at discount.
Also, one warrant is RM1.80, invest in MBSB is RM2.80, need more money.
Unless you have 3 warrant 1.80X3 = RM5.40, and buy back only 2 MBSB, RM2.80X2=RM5.60.
3) Sell warrant just before cut-off date, buy back warrant after cut-off where the price is expected to drop about RM0.20. A bit risky becuase after you sold, the price may go up before drop RM0.20.
4) Got one illegal way of make money but I will not mention it. I will not do it also. Because is illegal.
What if I hold warrant but I don't do anything. Then I will lose out because later warrant will drop about RM0.20.
Please note that the above is my own case study. I don't have time to explain in detail. My info may be wrong. This is not an advice or recommendation. Please consult your financial planner, remisier or dealer.
I do my own case study because if I have MBSB warrant and do not take action, I will lose out about RM0.20. I hope MBSB warrant holder will not lose out.
More information on MBSB, here.
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