Boustead Singapore

[Musicwhiz]

OMH ended at the highest level of A$0.43 since Boustead has taken a strategic placement @A$0.35.

If another strategic placement of convertible notes due 2016 to Hanwa is any indication, the conversion price of A$0.80 could be indicative of the latent value of OMH.

http://www.asx.com.au/asxpdf/20120307/pd...p3w9wh.pdf

This simply indicates to me that once OMH’s share price crosses A$0.80, it will be EPS dilutive for existing shareholders as Hanwa would wish to convert the CN into shares. By itself, it does not really indicate the merits of OMH’s business; they are simply employing different methods of raising funds, and CN would give Hanwa a yield of 5% while they wait for the business to improve (through investment in the Sarawak Project). It is also noteworthy to consider whether OMH, at the point in time, will be paying a dividend, and whether the dividend yield exceeds 5% by 2016; otherwise Hanwa may just choose to retain its CN at 5% and not choose to convert unless they perceive massive upside to the share price (i.e. capital gains will trump bond coupon yield).