Barramundi bonus beckons warrant investors

Investors in who bought into the Barramundi trust IPO three years ago are out of the money with their free warrants – but are being given a second chance.

Barramundi invests in Australian shares and is managed by Fisher Funds. It sought to raise $100 million in an IPO in 2006, but received applications totalling $126 million and scaled back the applications.

IPO investors were given a free warrant (NZX: BRM WA) for every two shares bought. The warrants had three exercise dates and the last one was is on October 26.

It is unlikely anyone will take up the warrants as they would be paying $1 per share when the shares are only trading at 69c. However, late on Friday Barramundi announced a pro-rata bonus issue of warrants to shareholders.

Barramundi shareholders will be allotted one new warrant for every two shares held. Holders of the new warrants will have the right to subscribe for one ordinary share in Barramundi for each warrant held.

The subscription price is 75c a share and the final exercise date for the new warrants will be 27 October 2011.

“In determining the exercise price, the board has taken into account Barramundi's current net asset value and share price, and the impact of the introduction of the long term dividend policy of 2% of NAV per quarter.”

Some of the existing warrant holders have made representations to the board to either extend the final exercise date or allow 2006 warrant holders to participate in a new issue.

“The board concluded that it would not be equitable to current shareholders to grant such an extension. Legal advice obtained supports the board's conclusion,” it says in an announcement.

“The terms of the existing 2006 warrants state that: ‘If, before the exercise or lapse of the warrants, the company makes a pro-rata bonus issue of ordinary shares or other securities to existing shareholders (other than an issue in lieu of dividends or an issue from retained earnings), shares or securities will be reserved for issue to warrant holders on the date that the warrant holder exercises the warrant.’ Therefore holders of the 2006 warrants can become eligible to participate in the issue of the new warrants by exercising any 2006 warrants they hold at $1 per share prior to their expiry on 26 October 2009.”

Comments from our readers

No comments yet

Add your comment:

Your name:
Your email:	Not displayed to the public
Comment:
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Anti-spam verification:

Type the text you see in the image into the field below. You are asked to do this in order to verify that this enquiry is not being performed by an automated process.