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UEM Land Holdings Bhd has proposed to raise about RM970mil via a rights issue to repay its borrowings, pay for the acquisition of land in Cyberjaya and for property development and working capital purposes.

In a filing with Bursa Malaysia yesterday, UEM Land said the issue price for the rights shares was expected to be fixed at a discount of at least 30% to the theoretical ex-rights price of its shares immediately before the price fixing date which would be determined and announced in due course.

UEM Land intends to utilise RM633mil from the gross proceeds to repay a term loan owed by wholly-owned unit Bandar Nusajaya Development Sdn Bhd and RM266.2mil for property development.

Managing director and chief executive officer Wan Abdullah Wan Ibrahim said the proposed rights issue would allow the company to raise funds to repay its borrowings and reduce its interest cost which would lead to a more robust capital structure.

Wan Abdullah Wan Ibrahim says the rights issue will allow the company to repay its borrowings

“The inflow of capital for our property development activities will accelerate the realisation of value from our Nusajaya land bank and spur UEM Land’s future earnings growth,” he said, adding that the company had a number of property projects in the pipeline.

“We are also optimistic that for 2010, the overall property market in Malaysia will outperform 2009 – particularly for Johor where we expect a lot of excitement arising from the successful implementation of Iskandar Malaysia’s initiatives and the spillover demand from Singapore with the recovery of Singapore’s property market and the opening of the Marina Bay Sands and Resorts World Sentosa,” Wan Abdullah said.

Subject to all approvals being obtained, the proposed rights issue is expected to be completed by April 30.

In line with its confidence in and continuing support of UEM Land, UEM Group Bhd (a major shareholder of UEM Land) has provided its irrevocable written undertaking to subscribe in full or procure the subscription in full of its entitlement under the proposed rights issue

As at Dec 31, UEM Group held directly 1.87 billion UEM Land shares, representing 77.14% equity interest. Pursuant to the UEM Group undertaking, UEM Group’s minimum subscription amount will be about RM748.2mil.

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• Types of stocks traded in Bursa Malaysia

This posting is about the type of stocks available to trade in Bursa Malaysia.

Ordinary Stocks

When purchasing an ordinary stock, you own a share of the company. This entitles you to receive profits from the operations of the company in the form of dividends. At the annual general meeting (also referred to as an AGM), you have voting rights. Ordinary stocks are what you will start to trade in and most traders never venture beyond this.

Preferential Stocks

A preference stock is different from an ordinary stock. Preference stockholders receive dividends before dividends on ordinary stocks are announced. If the company is wound up, preference stockholders rank above ordinary stockholders in the distribution of assets. Preference stocks can often have a fixed dividend rate.

Bonus Issue

This is a free issue of stocks to the stockholders based on the number of stocks already owned.

Rights Issue

A rights issue can be granted to stockholders to buy stocks in the company, often below market price.

Derivatives

There are also securities you can trade on the market that derive their price from the parent stocks.

There are two types – Options and Warrants – and these are collectively known as Derivatives.

Options

There are two parties involved in an options contract, the writer or seller and the taker or buyer. The writer writes the option and has the obligation of accepting or delivering the stocks. The takers have the right, but not the obligation, to buy or sell the stocks. There are many advantages of options trading, the least of which is leverage. An option can be bought and sold for a fraction of the stock price, giving an effective higher return (or loss) on investment for a stock price move.
Warrants

Warrants, like options, derive their price from the parent security. Warrants though are issued by banks and other financial institutions and are classified based on whether they have an investment or trading purpose. Warrants may be issued over securities, a portfolio of securities, a stock price index, currency or commodities.

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