Global Investments

[Nick]

http://info.sgx.com/webcoranncatth.nsf/V...3003CE9E7/$file/05_120229_NoticeofBooksClosureDateforRightsIssue.pdf?openelement [Book Closure Date]

Based on yesterday announcements, GIL will XR on 15th March 2012. GIL share price has taken a beating since announcing the FY 11 results and the rights issue. It has dropped from 15.8 cents to 14.1 cents today with 0.75 cents dividend XD in the period. Based on the current trading price, the theoretical XR price is 13.67 cents. To maintain its 1.50 cents distribution, GIL needs to generate free cash-flow of $12.4 million. In FY 2011, it generated FCF of $9.4 million but with the redemption of Pepper Notes 6 and possible suspension of coupons from its European Notes, its FCF may drop this year (but partially mitigated by contribution from the newly purchased CLO coupons). In other words, the quanta of the DPU will depend solely on STAM ability to utilize the rights proceed (of $35 million) and $42 million cash to purchase assets with decent yield and potential for capital appreciation. 2012 may turn out to be an eventful year for the Fund - whether it will be positive or negative events remains to be seen haha !

(Vested)

[Nick]

I just realized that GIL had uploaded their FY presentation recording on their website - http://www.globalinvestmentslimited.com/...tation.mp3 [Recording].

It was a briefing for analyst held by the Chairman. The interesting bit was towards the Q&A at the end where he gave more details about the upcoming targets - it seems that GIL is planning to invest in operating lease assets (like rails and aircraft) which requires larger cash out-flow. They are bullish about the rail leasing sector based on their experience with Ascendos. At the same time, they will also invest in more liquid assets as outlined by the new investment mandate. I guess I was wrong about STAM slowly cutting off the operating lease segment with the sale of the 2 aircrafts and concentrating on liquid loans etc.

Any thoughts on this D123 ? Thanks.

(Vested)

[D123]

I just tuned in to the recording and my first impression is that there's no real new information there. Mr Boon was pretty much just reading off the slides man. But I'll take that as they did a pretty comprehensive set of slides!

On the company's future investments, I'm rather ambivalent towards their proclamations at the FY2011 briefing, since they seem to be just reiterating the wide investment mandate they obtained in Dec 2011, without a firm commitment to any one asset class. So I'll reserve judgement till they announce any actual investments. In effect, I don't really care what they invest in, as long as they make an adequate level of returns with low risks.

And in general, even though I am not very enthused about leveraged investments in rail and aircraft leasing (I'd rather own the railroads or air routes), I must admit that at a certain price, and with conservative leverage, they can still be profitable ventures. Let's hope GIL can execute well in those areas if they choose to pursue it.

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On a side note, I would be more concerned about the LIBOR manipulation scandal, which if true, might have been crimping / will crimp the upside to GIL's floating rate investments.

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On yet another side note, I think GIL's portfolio of investments are quite straightforward, if not exactly simple to understand. The company does make substantial disclosure on the nature of their investments. I do not think the nature of their portfolio has changed much in the past few months, so the drop in share price seems to lack fundamental basis. If it drops to a certain price, I would definitely be interested in buying.

[flinger]

Hi Nick and D123, the rights issue cannot be done through ATM am I correct to understand that?

[Nick]

Based on the previous OIS:

PARTICIPATING BANKS FOR ELECTRONIC APPLICATIONS THROUGH AN ATM:
1. Oversea-Chinese Banking Corporation Limited
2. United Overseas Bank Limited and its subsidiary, Far Eastern Bank Limited

POSB is not used.

[cyclone]

Based on the previous OIS:

PARTICIPATING BANKS FOR ELECTRONIC APPLICATIONS THROUGH AN ATM:
1. Oversea-Chinese Banking Corporation Limited
2. United Overseas Bank Limited and its subsidiary, Far Eastern Bank Limited

POSB is not used.

Can the application be done via OCBC internet banking ?

[Nick]

GIL has uploaded the latest OIS in their website. Looks like same list of participating banks as the previous year.

http://www.globalinvestmentslimited.com/...tement.pdf [OIS]

http://www.globalinvestmentslimited.com/...tement.pdf [Time Table]

[Nick]

It XR at 13.3 cents today with over 900 lots traded. To maintain 10% yield, it needs to distribute $11.0 million cash per year. It generated $9.4 million cash-flow in FY 2011 after taking into account debt amortization. I guess the rights shares will be trading at around 0.5 cents if the mother price remains at this level next week.

(Vested)

[Nick]

It seems that GIL is seeking to join in the Preference Shares band-wagon by asking shareholder's permission in the upcoming AGM to change its bye-laws. While this could merely be an 'admin' move to give it greater flexibility, it is also possible that some big M&A is in the midst judging by the $35 million rights issue, large cash pile of $25 mil net cash (and further $30 mil cash proceeds coming in Apr 2013) and the expansion of its investment mandate. Let's wait and see.

http://www.globalinvestmentslimited.com/...eOfAGM.pdf

http://info.sgx.com/webcoranncatth.nsf/V...D003AB4A6/$file/08_20120327_ProposedAmendmentsToTheBye-laws.pdf?openelement

Share price remains unchanged at 13.1 cents.

(Vested)

[Nick]

The brief results of the rights issue are out with 129.8% subscription compromising of 77.0% valid acceptance and 52.8% excess application.

http://info.sgx.com/webcoranncatth.nsf/V...A0080ED2B/$file/09_20120409_BriefResultsofRightsIssue.pdf?openelement [SGX Announcement]

http://www.globalinvestmentslimited.com/...20reso.pdf [2011 Annual Report]

The proceeds should raise GIL cash position to over $75 million which is quite significant compared to the current market capitalization of $108 million.

(Vested)