Preferred Stock Offer
#1
di ko gets ito... can anyone help?

Dividend rate shall be equivalent to the 90% of the 10-year PDST-R2 as of the time of the issuance of the shares (the “Issue Date”), payable annually on each anniversary of the Issue Date. The dividend rate will be repriced every ten years thereafter at 90% of the 10-year PDST-R2 prevailing on each relevant tenth year anniversary of the Issue Date. In case the PDST-R2 ceases to be an acceptable benchmark, the replacement mark-to-market benchmark as determined by the Bankers’ Association of the Philippines will be utilized.

Convertible to one common share for every one voting preferred share commencing on the 10th year after the issuance of the voting preferred shares at a conversion price which shall be the higher of the 30-day average closing price of the common shares or the closing price of the common shares immediately preceding the exercise of the conversion option less the par value of the voting preferred shares.

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so far pagkaintindi ko...

1. ung 10Y PDST-R2 sa PDEX galing 5.4% ung rate so 90% nyun ung dividend rate ko. 4.86%. Pero if offer price niya is 0.1 per share fixed na ba un? laging 0.00486 pesos per share ung dividend ko? Undecided

2. Annual ung dividends. Smile

3. then after 10 year convertible ito common stocks. 1:1? or may gagawin pa ung "conversion price"? Undecided


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#2
up please...same question here Smile...
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#3
Yes, you are correct to some extent: if 10-yr PDST-R2 is 5.4% at pricing period, then your preferred dividend rate would be 4.86% or Php4.86 for every Php100 of preferred shares you own. This is is fixed for the first 10 years, then is repriced every 10 years thereafter. It is a FIXED amount on an annual basis: Php4.86 per Php100 in 1st 10 years. Note: you normally compare this yield with the yield of other fixed-income securities such as treasuries and corporate bonds, or even bank accounts. Furthermore, the preferred dividend is taxable, so you need to compute for withholding tax of 10%.
You have the option to convert on the 10th year to common shares but this has an additional cost, which is the difference between what you paid for the preferred shares (the par value) and the prevailing price of the common shares at the time of conversion (based on the given formula for computing the average common price).
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#4
up ko lang to... may offering kasi sa SMC.

kung pumasok ako sa preferred stocks, say 5 years tenor at 7.5% per annum, hindi ko ba talaga pwede ibenta within 5 years? ano naman yong 7.5% per annum, yon ba ang dividend rate? pag magbenta naman ako, pareho lang ba sa common stocks na tinitrade, kapwa trader din bibili or ang company na mismo magbayad. please enlighten this "trying hard newbie" - trying to shape the future with stock market nut
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#5
(08-17-2012, 01:28 PM)INDO Wrote: up ko lang to... may offering kasi sa SMC.

kung pumasok ako sa preferred stocks, say 5 years tenor at 7.5% per annum, hindi ko ba talaga pwede ibenta within 5 years? ano naman yong 7.5% per annum, yon ba ang dividend rate? pag magbenta naman ako, pareho lang ba sa common stocks na tinitrade, kapwa trader din bibili or ang company na mismo magbayad. please enlighten this "trying hard newbie" - trying to shape the future with stock market nut

Preferred stocks don't have tenor per se, although they may be convertible, redeemable or have an embedded put option, all of which would function as having a "maturity" date or tenor.
The 7.5% would be the dividend rate based on par value of the preferred stock; however, the company may opt to offer it at a different price than par, which would then mean a different yield for the primary buyer (the first owner of the preferred shares).
Once the preferred shares are listed at the PSE, these would trade like common shares, except that the fundamental basis for buying/selling the preferreds would be based on its effective yield vs. the available yields on other fixed-income securities such as bonds and other preferreds.
To compute yield: dividend payment divided by market (or offer) price.
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#6
Thank you sir the g00g0l for a very informative explaination winking
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