Eratat Lifestyle

Also, please read the article below.

As can be inferred from the article,

Eratat placed Rmb134m of 12.5% bonds with 82.5m warrants to SWAT Securitisation Fund. SWAT, in turn, offered a Rmb106.8m senior tranche of ABS to investors and a Rmb27.2m junior tranche to Sun Hung Kai Financial.

SHK's portion of the bonds is only about 20% or RMB 27.2 million. The rest was offered to 'investors'. RMB 27.2 million is only about 5.5 million SGD which is nothing to SHK, when placed alongside their many other investments. SHK is a multi billion dollar company, what is 5.5 million SGD to them?


www.ifrasia.com/eratat-seals-dim-sum-abs/21097640.article

Eratat Lifestyle has completed a Rmb134m (US$22m) securitisation in the first private placement of asset-backed securities in the offshore renminbi market.

The company placed Rmb134m of 12.5% bonds with 82.5m warrants to SWAT Securitisation Fund, a SPV of Sun Hung Kai Financial. SWAT, in turn, offered a Rmb106.8m senior tranche of ABS to investors and a Rmb27.2m junior tranche to Sun Hung Kai Financial.

The Singapore-listed apparel-maker is paying an annual coupon of 12.5% on the two-year bond, issued at 74.44. That translated to a hefty yield of over 30%, leaving plenty of room for a securitisation transaction.

However, the interest rates on both the senior and the junior ABS tranches were not disclosed. The exercise price is S$0.25 for each warrant , which represents an 85% premium to July 15’s share closing of S$0.135.

Proceeds will be for expansion. Eratat’s gross profit ratio was at around 18.4% for 2012.

Rival bankers saw the deal as a high-yield structured product rather than a proper ABS as the bankruptcy-remote and the relatively low interest rate features are not significant in this case.

The bond has a charge over 121,525,000 shares in the company directly and indirectly in the hands of Lin Jiancheng, the company’s CEO. The shares represent approximately 25.59% of the existing issued share capital of the company.

The transaction was the combined result of the sudden liquidity squeeze in the onshore market in late June/early July and a reverse enquiry from high-yield investors chasing yields.

The reason the warrants were bundled into the bonds was that the company’s share price had hovered at lows recently and it would have been very unfavourable to existing shareholders if convertible bonds had been issued instead.

As for the use of the ABS structure, it was to boost the confidence of investors in buying into the deal as Sun Hung Kai Financial is retaining around 20% of the transaction as a junior tranche. Sun Hung Kai Financial acted as arranger, as well as co-investor, on this transaction.

skeptic skeptic, are u going to eat back ur words?

who cares about the IPO price? i didn't buy at IPO. And, compared to IPO times, Eratat net profits have grown and its fundamentals have got stronger compared to its IPO days.

the more markets dun care, the more undervalued it is and the greater the reason i want to buy.

3,925,000 shares changed hands today. Up +0.012 today (+9.2%).

As for that article, i have already seen it and SHK holding onto 20% bond is a good support for the Eratat.

The rest was offered to 'investors'. RMB 27.2 million is only about 5.5 million SGD which is nothing to SHK, when placed alongside their many other investments. SHK is a multi billion dollar company, what is 5.5 million SGD to them?

5.5 mil sgd is nothing. 5.5 mil also money hor. if i am SHK director, i will fire u. People don't put money in for no reason unless they trust u n ur company will perform. Don't forget SHK also has to answer to the corporates and retailers who it sells the bonds to and SHK has a reputation to live up to. Skeptic is living in his denial world.


skeptic, get a life la. why u so free to comment on Eratat since u never even vested. If u wan to comment, make some intelligent comments la instead of repeating the same old comments. I also dun usually comment negatively on other stocks if i am not vest in it. A good comment should give both sides rather than a one sided biasness. And worse still, when u know nuts about its business.

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Guys, I am trying to control myself but it can't be helped when there are annoying people around. If i sound harsh, please forgive me.

finally, let's see if this forum can have some peaceful days from the skeptism group over the next few days...

Skeptic wrote: I really feel sorry for you all.

Eratat IPOed at 30 cents, till now still languishing at 13 cents. It moved up a mere 3% in one day and you all get excited, really clutching onto straws man.

In contrast, Sino Grandness IPOed at 29 cents, now at $1.50, 5 times IPO price - now that is something to be happy about.

Not this pathetic 3% intra-day fluctuations of a penny stock with a dubious balance sheet that passionate Eratat 'supporters' are here taking pride in.

Newbiestock, chill...

Why get upset? It's your money that u will be winning or losing. I kinda agree and disagree with u.

I agree that we should not keep harping on the same issues especially if it have already been diliberated thoroughly from different angles, unless there is a new perspective, good or bad, or some update of numbers.

But I do not agree that we should not post anything if we are not vested, it's good to see things from all perspectives, but hey, I think we all should have our rights to our opinion as its our money that we will make a windfall or loss. Not point trying to force someone to accept the logics, or arguments.

As I have post in value buddies, the financial cost of this exercise is 8 million per quarter, Eratat has to grow more than 25% each year for the next 2 years for this exercise to be a good deal in the short term. I dun have that much confidence as you, and will pass.

But, for the sake of many ppl vested, I also hope that my predictions for poor showings to be wrong, as ppl will get burnt rather than wish to see ppl suffer and gloat at the sidelines: see, I told u.

If Eratat turn up to be a gem, good tidings for investors, if its a lemon, investors have been forewarned enough already, I think, and they should have no one to blame but themselves. Harping in the same point over and over again and quarreling over every small price movements is really very silly.

Lets keep the forum true to the name of this website. Lets have the next insight, please.

Yup. Greenrookie, i totally agree with u n appreciate ur both sided views, which gives my respect.

No point repeating the same issues n debate over again. . We shld look forward to see wat nixe surprises eratat has for shareholders.

I wan to chill down too so let's give this forum page some peaceful days. Let's just wait n see bah.

Hahaha Greenrookie, you can't blame him la, if you were him would you be chill? After investing so much in a company which says it got so much cash but still needs to borrow 100 mill at 32% interest rate, would you be chill? If was me, I wouldn't be able to sleep at night

When you fall in love with a stock, you do anything for it. You defend it till the very end no matter how questionable some of its actions are, it is an unconditional love, a very dangerous thing to happen in stocks investment.

Well if you wanted new insights, my previous post provided it. Despite the fact that Newbiestock had read the article before, he conveniently ignored or failed to point out the fact that SHK's stake in the bonds is actually only about 20%, a very small fraction of the overall. This should be made known to forumers. Yet by this mere 5.5 million bond investment, he thinks SHK is going to partner Eratat and transform it into the next China Zara. He would rather believe this quite fantastical scenario than do what any rational investor would do -question why the company needs to borrow 100 mill at 32% interest rate despite claiming to have 100 mill in cash.

This is the same Newbiestock that was in denial when I first pointed out to him that the effective interest rate for the bonds was 32% - he shouted and screamed like an indignant child, throwing insults and accusing me of being unable to understand financial documents - now he still has the face to come here and pretend to be a know-it-all. If you want to put your faith in such a deluded person, go ahead, but you have been warned

Anyway good luck to you guys, and Greenrookie, thanks for your insights as well. I've said what I needed to say for now.

Skeptic, don't worry abt me. I can sleep with peace n happily laughing holdin eratat. i am not bothered by the high effective interest rate because i know they already have a plan in place to beat the interest and the discount. if u dun believe, then dun buy lol.

20% of a bond is not small. The remaining 80% are hold by many smaller bondholders. And, at 20%, SHK is still the largest bondholder by percentage compared to the many small fries. tat's why julian so sits on the board now

U still wan to harp on to the old interest rate mistake which i hv admitted. Up to u lol.

Dont everyday disturb this forum when u gt nothing new to say. 2 to 3 mths time later, i shall see if u will eat back ur words. Just watch la.