SAIZEN Reit has proposed a renounceable non-underwritten rights issue with free detachable and transferrable warrants. All these hinge on the issue price of 9 cents each, which represents a discount of about 30% of last-traded price of 13 cents.
Saizen has top the reit in Singapore as the worst performing reit in share price. It dropped by 85% (from $0.89 to $0.13) and distributing historical dividend of more then 40% now.
It dropped further 7.37% this morning to $0.12, after the announcement made.
Any investor with sound mind will not expect a 40% dividend payout to be sustainable in long term. The high level of gearing is worrisome under credit crunch environment. A better development now is for Saizen to find a substantial shareholder to sponsor the reit instead of currently fragmented shareholding.
It may be good for it to crash below 9 cents and to force all committed shareholders to subscribe all rights shares to increase their stake.
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