MRCB renounceable rights issues- The three choices

Just before the financial crash in October 2008, I bought some MRCB shares after learning about the many contracts the company was supposed to be given and  also in expectation of the rolling-out of  the  9th Malaysia Plan projects. Not thinking that the US subprime crisis could have such a devastating effects on the financial world, I was very pleased as I bought the shares at the lowest for the whole year! (A lesson here is not to trust historical data without taking into consideration other influencing factors affecting share prices).

The rest as they say is history. But I managed to recover some losses by buying more shares of the battered security when it was almost rock-bottom at 0.70 sen in December 2008 and later sold them at 1.46 late last year. But I am still saddled with some shares which, had I sold them  at the various quoted prices all these months, I will still suffer losses. I am keeping them because, believe it or not, I have faith in the company.

When the company announced that it was going to increase its capital through rights issues, I am now faced with three choices on my allotted rights at 1 to 2 existing shares that I have : 1. Act on the rights by buying them at the stated price of 1.12 which is at a discount of the current market price, 2. Sell them on the market, at the point of writing at 0.12 sen  or lastly  I can pass on taking advantage of my allotted rights .... let them lapse out of anger and frustration.... it takes a lot to make me angry and frustrated though.

I was mulling over on what I should do... trading them at the laughable price would actually still enable me to grab some more AXIATA or MAXIS shares but buying them at 1.12 means I will have more shares and if I were obstinate enough to wait, I think this company will finally perform! It would be unthinkable to let them lapse.

Then my hard working stockbroker rang up yesterday to remind me on the deadline of submission of rights' purchase on 19 Feb.... make your decision.. buy, sell or pass. Forced to act, I decided that selling at 0.12 sen was downright degrading and letting them lapse was and act of stupidity so I rang up my banker to please prepare the banking draft.. there goes my extra pocket money for my upcoming London holiday!

Big Ben  courtesy Oldgoldcross

I can see that smart investors would give a wide berth of MRCB as its dividend-paying capability has been poor despite its mega projects and development in KL Sentral. This is mainly due to its high gearing which had I made a proper company research I would have avoided buying the shares in the first place. Too late now.

I hope MRCB's anchor investor, EPF would keep me company for the long wait to realise the fruit of my sacrifice... actually waiting for rewards is more exciting then actually receiving them. Now which of the three drinks would perk me up.... Nescafe, Colombian coffee or chocolate?