(a) TERP

5 share RM4 20
1 share RM3.40 3.4
23.4

=23.4/6= 3.9

value of rights per exisitng share = (3.9/3.4)/5=0.1

(b) option 1 does nothing

wealth before right issue 1000*4 RM4,000
wealth after right issue 1000*3.9 RM3,900
loss wealth RM100

option 2 fully subcribes for the new shares

value of total shares after right issue 1200*3.9 RM4,680
less: cost of subscribing for the right 1000*1/5*3.4 -RM680
net shareholder wealth RM4,000

option 3 sell the rights

value of current shares after right issue 1000*3.9 RM3,900
proceed from sale of right 200*0.5 RM100
total shareholder wealth after sale of right RM4,000

option 4 sell some right to buy some new shares

no of shares to buy =0.5/3.9*200=26

proceed from sale of rights 174*0.5 87

less cost of subscribing 26*3.4 -88.4
total value of shares 1026*3.9 4001.4
nit shareholder wealth 4000

© current eps
15.24=4/eps
eps=0.2625
 revised eps
current revised loan notes interest (4500*12%)
PBIT 2128 2128 OD interest (1250*7%)
Interest 628 327.5
PAI 1500 1800
tax 30% 450 540 no of share before right issue (2000/0.5)
PAIT 1050 1260 right issue (4000*1/5)
no of share after right issue
share 4000 4800
eps 0.2625 0.2625 funds raised from right issue (800*3.4)
(-)issue cost (question)

loan notes left (4500-2500)

revised loan notes interest (2000*0.12)

revised OD interest (1250*0.07)

(d)

€
es interest (4500*12%) 540
est (1250*7%) 87.5
628

are before right issue (2000/0.5) 4000

ue (4000*1/5) 800
are after right issue 4800

ised from right issue (800*3.4) 2720

cost (question) 220
2500 redeem loan notes

es left (4500-2500) 2000

oan notes interest (2000*0.12) 240

OD interest (1250*0.07) 87.5
327.5
(a) no of new share =90m/(7.5*0.8)=15m
term of right issue=15m/60m=1 for 4

4shares RM7.50 RM30.00

1 share RM6 RM6
RM36.00

TERP= 36/5 7.2

b current revised
PBIT 49 49
Interest 8% 10 3.6
PAI 39 45.4
tax 30% 12 13.62
PAIT 27 31.78

share 60 75
eps 0.45 0.4237333
P/E 16.666667 16.666667
current price 7.5 7.0622222