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SCNWOLF-LA Should be Worth More Than SCNWOLF-WA

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.



Investors seem to be unaware of the warrant feature of SCNWOLF-LA. At the close of trading on the first day which was 9th August 2021, SCNWOLF-LA closed at RM0.135 while SCNWOLF-WA closed at RM0.125, while the mother share last traded at RM0.41.





Warrant Price




Mother Share Price




Exercise/Conversion Price




or 3 for 1

Expiry Date












Historical Volatility




Warrant’s Implied Volatility








Effective Gearing




*Estimated issue date

The warrant was actively traded in the first day with volume at 200% of issue size while the ICULS did not attract that kind of volume. SCNWOLF-WA has in fact started to trade higher than SCNWOLF-LA in the morning of 11th August 2021.

Malaysian punters normally like to speculate warrants while many view ICULS as conservative interest paying instrument. Many ICULS also don’t have warrant feature. Furthermore, many ICULS issues are large and when converted increases the mother share base. SCNWOLF-LA is trading at a staggering discount whereas the warrant is trading at a premium. It is a mater of time that the price of SCNWOLF-LA will climb above SCNWOLF-WA or SCNWOLF-WA price drops below SCNWOLF-LA. In any case, SCNWOLF-LA downside may be limited as its holders will be reluctant to convert to mother as the ICULS pay a coupon of 3% of nominal value unless the price of SCNWOLF-LA rises a lot more.

Below are the links to some recent articles on Scanwolf for information on the mother share.

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