KUALA LUMPUR: Sunway Bhd executive chairman Tan Sri Jeffrey Cheah converted 1.4 million units of warrants on April 30, before the ex-date for distribution of shares in Sunway Construction Group Bhd in tandem with the latter’s listing exercise on Bursa Malaysia. 

A filing with Bursa Malaysia yesterday revealed that Cheah had exercised the warrants at RM2.50 per share, translating into approximately RM3.5 million in total.

Cheah converted the warrants through his investment vehicle Sungei Way Corp Sdn Bhd, bringing his shareholding in Sunway (fundamental: 1.5; valuation: 1.8) to over 985.57 million shares or 56.35% equity interest.

The warrants have a tenure of five years, maturing on Aug 17, 2016, and were issued on a one-for-five basis on Aug 18, 2011. To reward shareholders, Sunway has undertaken an exercise to distribute Sunway Construction shares as dividend in specie. 

In a note dated May 6, MIDF Research said the next catalyst would be the distribution of a special dividend after the initial public offering (IPO). “It was mentioned in Sunway’s circular to shareholders that the board would propose the declaration of a special cash distribution subsequent to the proposed listing of Sunway Construction. The amount will be between 22 sen and 25 sen subject to proceeds to be raised from the proposed offer for sale,” MIDF said.

MIDF has reduced its target price on Sunway to RM3.86, subsequent to the ex-date of the share distribution. The revision was based on the IPO’s indicative offer price of RM1.10 per share, and a 1-for-10 distribution basis.

Sunway’s share price has drifted lower in the past three days to RM3.36 from a peak of RM3.76 on Monday to RM3.36 yesterday. Some 3.84 million shares were traded yesterday. 

This article first appeared in The Edge Financial Daily, on May 8, 2015.