Scanwolf Corporation Berhad recently completed rights issues of ICULS (Irredeemable Convertible Unsecured Loan Stocks – SCNWOLF-LA). This was renounceable rights issue of RM10.45 million nominal value of 5-year 3% ICULS at 100% of its nominal value of RM0.10 on the basis of 2 ICULS for every 2 existing ordinary shares in Scanwolf, together with 52.48 million free warrants (SCNWOLF-WA) on the basis of 1 warrant for every 2 ICULS subscribed. Besides that, there was also a settlement of creditor via issuance of 30,000,000 ICULS to settle RM3 million owning. Scanwolf is a relatively small company with only 105.75 million shares.
SCNWOLF-LA is a warrant-like instrument that also allows its holders to “exercise” the ICULS into the mother share by paying up in cash. The conversion price of the SCNWOLF-LA is 30 sen and its holders can either convert to mother share by tendering 3 units of SCNWOLF-LA or 1 unit of SCNWOLF-LA plus 20 sen in cash. The latter method of conversion turns SCNWOLF-LA into a warrant with an exercise price of 20 sen. When SCNWOLF-LA trade above its nominal value of RM0.10, using cash to “exercise” is more logical. SCNWOLF-LA also pays 3% coupon per annum.