Has this ever happened before in Malaysian history? It's a switch-a-roo. We got played!

At the end of the day, Tropicana will get the headlines that it redeemed Tranch 1 of the perpetuals, but only because they forced everyone onto a 4-year IMTN.

They don't say they will redeem if they lose the EGM, but logically they would cause otherwise they are subject to a higher rate. The thing is, there are provisions for them to defer the coupon payments.

I still think they won't go to that extent, it will be viewed as a credit negative event. So once they get their liquidity in order, they should redeem by March or Sep 2025.

I just wrote in to FSM to demand a reason as to why they are voting YES. They should ask individual bondholders to vote and take the majority decision.

All in all, you learn a new thing every day. We are but small fish in a big pond. The high and mighty have crafty ways to escape things that us little men have no avenue for!

Only way is a few FSM bondholders of the Tropicana 7.00% sukuk get together. Individually, we may not be able to do much of anything.

Which institutional investors are holding Tropicana perpetuals? Usually perpetuals are not on the radar for institutional investors. Plus this 7.0% was not-rated at the point of launch if I recall correctly.

The original perpetual is also a SENIOR SECURED. No difference.

Tropicana can defer the coupon indefinitely, but they won't be able to do a lot of things in the mean time with regards to dividend or other capital raising.

I spoke to FSM and also have an email from them.

1. This Exhange Offer is a historic first in the Malaysian market.

2. FSM dealer claims that it doesn't matter how they vote. The indication from other sukuk holders during the meeting with Tropicana was that they were favourable of this arrangement, so the 75% threshold will be met either way.

3. The new bond will be listed on Bond Express.

4. They make no promises but will provide liquidity for current holders to exit if there is demand for the bond in the secondary market.

5. FSM reserve the right to vote for Bond Express holders as they act as the principal.

6. Zero fees involved, we get 0.25% from Tropicana as a penalty fee of sorts.

7. There are around RM9mil odd lot holders who purchased via Bond Express

8. Indication is to conclude the Exchange Offer in late Oct 2024

...............

My take is maybe it's not all that bad, just that the principal is tied up for another 4 years.

6.25% is a decent yield. With Fed rate cuts incoming, bond prices generally will rise. So we might still be able to exit at par.

Also MARC has given a A rating with stable outlook for this new issuance.

This post has been edited by contestchris: Sep 13 2024, 07:55 PM

Obviously the call on the 5th year is optional, it already is a PERPETUAL bond. But the incentive to redeem it is there, due to the step-up penalty.

Even if they choose not to redeem, the way I see it, I rather stick with the perpetual bond and earn the higher interest. It jumps to 9% in Y6, then 10% in Y7, increasing 1% each year until it caps out at 15%. Either that, or just hand me the principal back.

Now Tropicana could also then choose to defer payment of the higher interest, but that will be to their detriment. They will not be able to pay dividends nor perform any capital transactions. It will be viewed as credit negative by the rating agency and the banks who loan them.

The switch-a-roo to the 6.25% 4-yr bond seems far too convenient for Tropicana at the expense of sukuk holders. It is unprecedented in the Malaysian environment, such a binding Exchange Offer has simply never happened!

By the way, you are wrong that there is more protection - the original 7.00% sukuk was also a senior secured sukuk. There is no changes in that regard.

It will accrue at 9% but it will just be a month or two

What's the market buying the 7% perps at? On FSM they are no longer offering to buy.

Any idea about the other IMTN due in 2028, what's the going price in the market? Not sure if the transactions via BPAM are accurate.

No the exiting perpetual also has a security cover of 1.5x. It had a security cover of 2.0x initially when it was unrated, which subsequently lowered to 1.5x when it got rated.

https://www.bixmalaysia.com/learning-center...perpetual-bonds

FSM is gone bonkers. I just got this email. What does it mean?

Dear Valued Client,

Thank you for investing through FSMOne.

We are writing this email regarding the extension notice of Tropicana Exchange Offer.

Please be informed that the extraordinary resolution voting conducted during the EGM on 8 October 2024 was not carried, investors who have abstained or rejected will not be exchanging to the new Sukuk and will continue to hold onto the existing Perpetual Sukuk.

The Issuer has decided to extend the Exchange Offer to all Sukukholders who have abstained or rejected the Exchange Offer until 18 October 2024. As such, we are reaching out to you again to seek your final decision on the Exchange Offer.

If you do decide to change your mind and accept the Exchange Offer, you will be:

- Exchanging your Perpetual Sukuk for the New Sukuk,
- Receive a consent fee of 0.25% of the principal amount in cash and,
- Accrued interest from the Existing Perpetual Sukuk.

Kindly respond to this email if you intend to accept the Exchange Offer by 3pm, 15 October 2024 (Wednesday). If we do not get a response from you, we will consider your previous actions as final.

For clients who have already voted to accept the Exchange Offer previously, there is no action required from you.

For more information, please refer to attached document.

Please feel free to contact us should you need further assistance.

------------

FSM already told me the voted on behalf of all Bond Express bondholders in favour of the resolution. They said we cannot vote individually. So why am I getting this email? Anyone knows? Also, looks like Tropicana is not giving up, they want another 3% acceptance to hit the 75% threshold. Seems kinda desperate, I wonder why.

This post has been edited by contestchris: Oct 14 2024, 06:12 PM

But FSM says they voted for us. Since we are holding odd lots on FSM, they said we can't vote. So I never voted before, they voted "yes" for me already. So pelik

Means? I'm kinda pissed with FSM cause they're keeping odd lot bondsholders out of the loop. They should explain what's going on. So far I don't see anything about any exchange happening. 2 weeks back they told me no news yet.

Yes correct.

{[(49 / 365) * 9% ] + 0.25%} * RM250,000 = RM3 645.55

This post has been edited by contestchris: Nov 15 2024, 12:29 AM

FSM has effected the exchange offer however I didn't receive the accrued coupon for the 9% bond or sweetener of 0.25%. Anyone else got it?

Yes I already shared that the FSM Bond Express exchange is a scam bond exchange. There are no market bids/asks, merely bid/asks from FSM at their own predetermined prices. If there is no volume on offer by FSM, you cannot buy or sell - this is the case for 90% of their Bond Express bonds.

I'm surprised no one has filed a lawsuit against FSM for the disingenuous marketing of their Bond Express platform.

Dude I'm talking about the Bond Express exchange.



This post has been edited by contestchris: Nov 22 2024, 02:09 PM

I cannot brain it as well and it is definitely worth a buy.

My gut tells me their insiders/cronies are holding this sukuk (they didn't accept the offer to switch to the other bond) and are laughing to the bank.

There doesn't seem to be any legitimate reason to keep it in the market and pay the step up rates.