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14 Sep 2010

Further to earlier announcements, MIMB Investment Bank Berhad (“MIMB”), on behalf of the Board of Directors of Masteel, is pleased to announce the following:-

(a) that the issue price for the Warrants has been fixed at RM0.18 per Warrant; and

(b) that the exercise price for the Warrants has been fixed at RM0.67 for every one (1) new Masteel Share.

The issue price for the Warrants was determined by the Directors after taking into consideration the following factors:-

(i) Based on the exercise price of RM0.67 per Warrant, the theoretical fair value of the Warrants is approximately RM0.38 per Warrant as at 13 September 2010 (being the latest practicable date prior to the price fixing date) computed using the Black-Scholes Option Pricing Model.

(ii) The Board had arrived at the issue price of RM0.18 per Warrant based on a discount of approximately 52.6% from the aforesaid theoretical fair value of the Warrants, whilst seeking to ensure that a reasonable amount of proceeds would be raised from the Warrants Issue. Such discount is deemed appropriate by the Board after taking into consideration the historical volatility and share price movements of the underlying Masteel Shares, the prevailing general market sentiments as well as the Board’s intention to provide an opportunity for the shareholders of Masteel to participate in an equity derivative (i.e. Warrants) of the Company at an attractive entry cost.

The exercise price for the Warrants was determined by the Directors after taking into account the following factors:-

(i) the five (5)-day VWAP of Masteel Shares up to and including 13 September 2010 (being the latest practicable date prior to the price fixing date) of RM0.8567 per Share;

(ii) with the aim that together with the issue price (i.e. entry cost), the exercise price (i.e. subsequent cost) of the Warrants would, in the opinion of the Board, be sufficiently attractive for the shareholders of Masteel to subscribe for their respective entitlements to the Warrants pursuant to the Warrants Issue and to exercise the Warrants in the future; and

(iii) the par value of Masteel Shares of RM0.50 each. 

For consistency, the abbreviations used in the above are the same as those previously defined in the Company's announcement dated 18 May 2010.

This announcement is dated 14 September 2010.
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