MRCB warrants surge on EDL takeover news

KUALA LUMPUR (Nov 7): Malaysian Resources Corp Bhd’s (MRCB) warrants were heavily traded yesterday, running ahead of the mother shares, on news that the government is likely to buy back the Eastern Dispersal Link (EDL).

The Edge Malaysia weekly reported over the weekend that the announcement in Budget 2018 on the abolishment of toll collection on the EDL from Jan 1 would benefit MRCB as analysts expect the government to take over the loss-making highway.

MRCB’s warrant B surged 27.9% on strong buying interest with 71.6 million warrants changing hands. MRCB itself only rose slightly by 3.88% to RM1.07 with about 28.64 million shares traded. Warrant B was only listed last Friday and was a free warrant for every five rights shares subscribed. The rights shares, issued on a one-for-one basis, were priced at 79 sen.

The new warrant’s exercise price is RM1.25, a 16.8% premium to MRCB’s share price yesterday. The warrants will expire on Oct 29, 2027. Most analysts expect cash proceeds from the rights issue to reduce MRCB’s net gearing level and interest expenses, allowing it to have the flexibility to fund new projects.

A local research house said MRCB has a substantial construction order book of RM5.5 billion, and remaining property with a gross development value of RM55.1 billion, giving it visible earnings prospects.

This article first appeared in The Edge Financial Daily, on Nov 7, 2017.

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