Insas: Don’t forget the warrants

KUALA LUMPUR: Insas Bhd is of the view that the 4% gross preferential dividend rate for its redeemable preference share is reasonable after taking into the consideration the free detachable warrants.
Shareholders at its EGM yesterday had requested that the company increase the dividend rate, on the basis that it is just "slightly" above the fixed deposit rate.
Speaking to reporters after its EGM here yesterday, its non-independent non-executive director Datuk Wong Gian Kui stressed that shareholders should look at a broader picture as the warrant has it intrinsic value as well.
"If you sell the warrant, basically your yield is much higher compared to only 4% dividend rate," he added.
Insas' unit M&A Securities Sdn Bhd director Bill Tan supported this saying that the issuance of preference shares is better than the "pure rights issue" of new shares.
Insas CEO Datuk Thong Kok Khee, who owns a 23.45% stake, however, declined to comment, saying that he rarely talks to the press.
About 99.93% shareholders approved the proposed renouncable rights issue of up to 138.67 million redeemable preference shares with up to 277.33 million free detachable warrants on the basis of one preference share and two warrants for every five existing shares held.
The issue price of each preference share has been fixed at RM1.00 with a tenure of five years.
The rights issue is expected to raise up to RM138.7 million, of which RM60 million will be injected into its stockbroking arm M&A Securities, RM5 million for Insas Pacific Rent-A-Car Sdn Bhd, RM20 million for the repayment of bank borrowings, RM30,000 for the subscription of a rights issue in its 31.05%-owned associate company Inari Amertron Bhd and RM22.27 million for working capital and general business purposes.
Insas is mainly involved in corporate finance advisory and stockbroking, property development, fashion retail, food and beverage and car rental business.
Commenting on M&A Securities, Wong said the group hopes to bring in more deals for initial public offering (IPO) with the latest Carimin Petroleum Bhd, expected to be listed on Nov 10.
"We're one of the top in the non-bank backed (securities houses)," he added.
Meanwhile, in response to the Minority Shareholder Watchdog Group's (MSWG) query on the employees' share option scheme (ESOS), Insas said it will be monitored by a ESOS committee, which is in compliance with the listing requirements.
When asked of the rationale of granting share option to non-executive directors, the company said that it is purely to reward employees and directors who have contributed to the group.