SINGAPORE – In a move that could dramatically increase market liquidity, listed airline logistics company A-Sonic Aerospace is issuing 14.6 million free warrants to its shareholders.

Under the proposed agreement “one subscription warrant for four shares”, each tranche of 1,000 A-Sonics shares held will give the right to 250 warrants. Shareholders can convert their warrants into shares on a one-for-one basis at an exercise price of eight cents.

Given that A-Sonic shares closed at 66.5 cents on Tuesday (May 25), that means holders of warrants who convert will receive their A-Sonics shares at a whopping 88% discount from the market price. closing of the Tuesday market.

Chief Executive Officer Janet Tan said the generous deal was primarily intended to reward investors: “Our loyal shareholders have been with us on this long journey and we felt it was time to show them some appreciation. Of course, if all warrants are exercised, as I would expect them to be, our total liquidity and share base will also increase. “

Exercise of the warrant could also bring the market capitalization and volume weighted average price of A-Sonic shares to a level where the company would be eligible to be removed from the Singapore Stock Exchange watchlist (SGX ), where it has been since June 2017.

The company – which operates in 29 cities in 16 countries – was put on the watch list when its market capitalization fell below the $ 40 million mark. But over the past year, its stocks have risen sharply, supported by improved financial performance.

The company recorded an after-tax profit of US $ 6.3 million (S $ 8.3 million) in fiscal 2020 compared to US $ 2.5 million in 2019. This increased its earnings per share at 14.9 cents compared to 5.9 cents in 2019.

SGX recently granted a one-year extension to the company’s watchlist tenure until June of next year.

If the 14.6 million warrants were converted into shares at eight cents a piece, the company would earn gross proceeds of $ 1.17 million.

Meanwhile, A-Sonic’s share base is said to increase 25% to 73.1 million, from 58.5 million now.

A-Sonic has a net tangible asset base of $ 48 million, giving its stock a net asset value of 82 cents – meaning that at Tuesday’s closing price of 66.5 cents, the stock trades at a 19% discount from its value.

In addition, its stock is backed by a net cash per share of 65 cents.

The stocks are trading at a price-earnings multiple of 4.3 times, a steep discount to industry peers, which are trading at 20 times earnings.

The company had a market cap of $ 39 million as of market close on Tuesday – just a mustache below the threshold to potentially get off the watch list.

It’s no wonder some analysts believe the stock is trading at a steep discount to its value. Many market watchers also expect A-Sonic to jump this week on the news of the bonus voucher issue.

The proposed issue of warrants and subsequent listing of warrants and shares are subject to SGX approval.