What is Loan Stock?

[GCONG]

Hi all,

My deceased parent had left behind, among others a loan stock which I have no clue what it is about.
I searched and now know that it is called 0% irredeemable convertible unsecured loan stock (ICULS) with conversion ratio of 2 ICULS to 1 share.
Maturity date is 2015. Issued date 2005.

Anyone could enlighten me so that I know what best to do with it?

Is it that I must convert it to common share before maturity date. What happen if I don't? Must I pay money for the conversion? And, how much if so?

[Dennis Ng]

Hi all,

My deceased parent had left behind, among others a loan stock which I have no clue what it is about.
I searched and now know that it is called 0% irredeemable convertible unsecured loan stock (ICULS) with conversion ratio of 2 ICULS to 1 share.
Maturity date is 2015. Issued date 2005.

Anyone could enlighten me so that I know what best to do with it?

Is it that I must convert it to common share before maturity date. What happen if I don't? Must I pay money for the conversion? And, how much if so?

Hi GCONG,

basically this is a Convertible Corporate Loan (bond). Converting into shares typically is an Option NOT an obligation.

On maturity date, most Corporate Loan (Bond) will pay back the original Loan amount. But current price of this Convertible (ICULS) might be higher or lower than original purchase price depending on market conditions and current interest rates compared to when the Bond was issued.

There should be prospectus or other information relating to all the terms and conditions of this PARTICULAR Corporate Bond Issue, and you should get your hands on those, read through the terms and conditions, as each Issue might have different terms and conditions other than the General Characteristics as I have shared.

As I always shared, Investing without doing homework or knowing what one invests in is actually Gambling, whether we realise or recognise it or not.

[GCONG]

Hi all,

My deceased parent had left behind, among others a loan stock which I have no clue what it is about.
I searched and now know that it is called 0% irredeemable convertible unsecured loan stock (ICULS) with conversion ratio of 2 ICULS to 1 share.
Maturity date is 2015. Issued date 2005.

Anyone could enlighten me so that I know what best to do with it?

Is it that I must convert it to common share before maturity date. What happen if I don't? Must I pay money for the conversion? And, how much if so?

Hi GCONG,

basically this is a Convertible Corporate Loan (bond). Converting into shares typically is an Option NOT an obligation.

On maturity date, most Corporate Loan (Bond) will pay back the original Loan amount. But current price of this Convertible (ICULS) might be higher or lower than original purchase price depending on market conditions and current interest rates compared to when the Bond was issued.

There should be prospectus or other information relating to all the terms and conditions of this PARTICULAR Corporate Bond Issue, and you should get your hands on those, read through the terms and conditions, as each Issue might have different terms and conditions other than the General Characteristics as I have shared.

As I always shared, Investing without doing homework or knowing what one invests in is actually Gambling, whether we realise or recognise it or not.

Hi Dennis,

Thank you for the reply. It is Malaysia Berjaya Corp ICULS stock code 3395LC. I am still searching for its terms and conditions brochure online as I have no history how my dad ended up with this loan stocks. It is 0%, that means it is not even giving loan interest to the holders. Nominal value is RM0.50 and last traded price is RM0.51 per ICULS. With conversion ratio 2 ICULS to 1 mother share and corresponding common mother stock being last traded at RM0.955, I think I shall not wait till 2015 and will convert now to earn at least its dividend from mother share.

Just sharing and hope this can be learning point for others in the forum.