Masteel's warrants 'out of the money' at half exercise price as expiry looms

KUALA LUMPUR: The majority of Malaysia Steel Works (KL) Bhd's (Masteel) warrants issued five years ago have not been exercised as their expiry approaches. Currently, Masteel shares are trading at around half their exercise price. The shares are at 20 sen, identical to yesterday's closing figure and 19.5 sen or 49.37 per cent lower than the warrants' exercise price of 39.5 sen. The warrants allow holders to buy one new Masteel share each, but they expire on Oct 21 at 5pm, according to a shareholder notice filed with Bursa Malaysia.

If not exercised by the deadline, they will become invalid. At the present share price, warrant holders would be paying nearly double the market price to acquire Masteel shares. The warrants last closed at 0.5 sen on Sept 8, with Masteel admitting they were "out of the money," meaning purchasing shares directly would be cheaper than exercising the warrants.

The warrants originated from Masteel's 2021 rights issue, where subscribing shareholders received one free detachable warrant for every rights share. The rights issue raised RM89.41 million for Masteel and offered the potential to raise an additional RM89.42 million if fully exercised. Trading in the warrants will halt from Oct 6, with their final trading day being Oct 5. They will be removed from Bursa Malaysia's official list on Oct 22.