PME Group (0379) convertible bonds, 91% discount!!

Company planning to raise $246M in cash from convertible bonds.

- Conversion shares of 487% of existing issued capital!!

- Conversion price of HK$0.03. Current stock price: $0.337. DISCOUNT OF 91%!!!!

- Current market capitalization : $623m (96% of book)

So shareholders (74.5% in public hands) are going to get savagely raped by the management who think the shares are worth less than 10% of book value.

Who gets the convertible bonds? In the filing:

“Placee(s)” any individual(s), institutional(s) or other professional investor(s)

procured by the Placing Agent, pursuant to the Placing Agent’s

obligations under the Placing Agreement, to subscribe for any part

of the Convertible Bonds

“Placing” the placing of the Convertible Bonds, on a best effort basis, by the

Placing Agent (pursuant to the Placing Agreement) under specific

mandate.

“Placing Agreement” the agreement dated 7 January 2010 and entered into between the

Company and the Placing Agent in relation to the Placing

No prizes for guessing what the shares will do tomorrow.

The SFC and HKex sleeping as usual.

Beware.