Warrants fail to add fizz to FN

  • Business
  • Wednesday, 29 Jan 2003


ALTHOUGH Fraser & Neave Holdings Bhd (F&N) is a household name as a producer of food and beverage (F&B), including fizzy drinks, investors who have been holding on to its shares from the time it was known as Malaya Glass Bhd are probably feeling a lot less effervescent. 

Despite three series of warrants, the opportunity to exercise them was never really there as the warrants were out of the money for the greater part of their validity tenure. 

“The rational investor will not have converted,” F&N company secretary Tony Lee told StarBiz in a telephone interview. 

From an exercise price of RM4.20 per share on the first set of warrants 1993/1998 which could be exchanged for a second set of warrants 1996/2001 at RM7.30 a share, that in turn could be exchanged for a third set of warrants 1998/2001 with an exercise price of RM3.28 per share, the timing and share price were never on the investors' side. 

Dividends paid out to the investor with an initial 1,000 shares and who did not convert his warrants during these 13 years work out to RM1,755. 

In the process, the investor would have paid RM10,245 for the initial purchase and subsequent subscription to rights and warrants. 

As of Dec 31, 2002, the investor would be looking at a paper loss of RM3,210. 

An investor who had opted to convert his warrants would be faced with a slightly lower paper loss of RM3,096. 

Historically, Malaya Glass was a manufacturer of bottles and glass containers for users such as Fraser & Neave Ltd. 

In 1995, the company accepted an offer from Fraser & Neave Ltd to acquire the latter's entire interest in Fraser & Neave (M) Sdn Bhd for RM965mil and took on its present name in 1996. 

From then on, the company evolved from being just a manufacturer of bottles and glass containers to a formidable player in the F&B market which counts 100 PLUS, F&N Soda drinks, Sunkist, Farmhouse, Magnolia and Meadow Gold ice-cream and F&N condensed milk among its products. 

Its dairy arm, F&N Dairies, diversified into yoghurt after a franchise agreement with Sodima International to distribute one of the world's top two brands, Yoplait, by April or May this year. 

F&N has captured over 50% share of the pasteurised juice segment, thanks to the popularity of Sunkist and Fruit Trees

In the ice-cream segment, it enjoys about 18% market share and ranks among the top three market players. It also holds 50% share of the condensed milk segment. 

About 95% of the company's products are for the domestic market and the balance exported to Hong Kong, the Philippines, Africa and Taiwan. 

Online investment advisory, Surf88, which has a buy on the counter, said F&N's devoted efforts to develop its isotonic (100 PLUS) and non-carbonated drinks (Seasons) were paying off as seen from the double-digit volume growth. 

“This is especially so for 100 PLUS which has further consolidated its position as the top isotonic drink in the market, though it already had 95% share when it launched three new flavours which captured strong response last year,” Surf88 said. 

“There is also good news from abroad, as its 60% owned glass manufacturing joint venture in Sichuan, China, is set to commence operations next month,” it said, adding that F&N's partner, Tuopai Yeast Liquor Co Ltd Sichuan, was the second largest liquor producer in China.  

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