Case study
Loan Facilities with Warrants
by Professor Ian H. Giddy
New York University
 Questions:
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Why did this company finance using warrants?
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How would you estimate what the warrants are worth?
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What is the effective cost of financing for this company?
SINGAPORE
LAND TO ISSUE UP TO 68.77 MLN WARRANTS WITH LOAN FACILITY/BOND ISSUE
28-Dec-1999
Singapore
Land Ltd said it plans to issue up to 68.77 mln warrants in association
with a transferable loans facility and bond issue.
The
transferable loan facility (TLF) and bond issue will be worth a total of
between 200-250 mln sgd and will be arranged by UOB Asia Ltd and underwritten
by United Overseas Bank Ltd.
The
bond issue will be used for Singapore Land's wholly-owned subusidiary Gateway
Land Pte Ltd, subject to its conversion to a public company.
The
warrants will be offered on a one-for-five basis and the offer price is
to be announced later. The warrants will be exercisable at any time up
to five years from the date of issue.
The
warrants will be initially issued to UOB as part of the arrangement for
the TLF and the bond issue. The term of the TLF and the bonds will not
exceed five years.
Singapore
Land said the TLF and bond issue will enable Gateway to enjoy the current
low Singapore dollar interest rates. The bond issue will allow the borrowing
costs to be locked in over the medium term. Funding Instruments in the Singapore Market (from an OCBC advertisement)
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