CM Equity Linked Products – Initial Public Offering (IPO)

By investing in the Non-Voting Redeemable Preference Shares issued by CM Equity Linked Products Ltd, investors can benefit from the following key advantages:

• Subscription in MUR to have access to a EUR-denominated instrument providing dividend income and repurchase in EUR;
• Non-voting Redeemable Preference Shares offering a minimum dividend of 12.5% (average of 2.5% p.a.) and targeted dividend of 25% ^T&C (average of 5% p.a.) over 5 years, subject to BHI events;
• Put (exit) option at the end of 5 years ^T&C, at the discretion of the investor;
• Annual early exit ^T&C facilitated by the Underwriter;
• Redemption by the Issuer at the end of year 6 at 105% ^T&C (premium of 5%) of the Issue Price

T&C (Key terms and conditions)

• Subject to the terms of the Prospectus, targeted dividends are 3%, 4%, 5%, 6% and 7% for years 1 to 5 of the Issue Date respectively, aggregating 25% over 5 years.
• Minimum dividends are 50% of the targeted dividends (i.e. 12.5%) and are paid as an interim dividend regardless of dividends received from the underlying securities, i.e., BHI Class D Preference Shares. A final dividend (representing up to 50% of the targeted dividends) is payable subject to the quantum of the dividends declared on the underlying securities.
• The put (exit) option available to investors at the end of 5 years is subject to no BHI Event (as defined in the Prospectus) having occurred. In case of a BHI Event, the put option may be suspended.
• Investors may request an early exit on each anniversary date of the Issue Date up to Year 4 (as defined in the Prospectus). In case aggregate early exit requests in any year exceed 10% of the issue size, MCB Securities Ltd may process all requests on a pro-rata basis.
• Investors not exercising their put option at the end of year 5 will not earn any dividends in the 6th year from the Issue Date but shall be redeemed, subject to no BHI Event occurring, at 105% of their initial investment, i.e., at a premium of 5%.

Key Considerations:

• Capital may be at risk: investors should be aware that their capital may be at risk if BHI goes into bankruptcy and there is not enough residual cash following the sale of its assets to repay Class D Preference Shareholders. For information, BHI owns 5 hotels and resorts (Le Royal Palm, Le Mauricia, Le Victoria, Le Cannonier in Mauritius and Saint Anne Resorts in Seychelles. It has senior bank debts, Class A and Class B Preference Shares which will rank higher than the Class D Preference Shareholders in terms of repayment priority in case of a winding up of BHI). Investors are strongly advised not to invest 100% of their investible funds in a single investment product.
• Targeted dividends: 50% of the targeted dividends (12.5% over 5 years) will be paid to investors regardless of any dividends being earned from BHI on the Class D Preference Shares but the remaining 50% is dependent of the quantum of dividends declared by BHI.
• Other risks and considerations: investors should read the Prospectus for a full appreciation of the other risk factors before subscribing to the Non-voting Redeemable Preference Shares.

Provided that no BHI Event (as defined in the Prospectus) has occurred, CM Equity Linked Products Ltd shall provide a put option to all Preference Shareholders on the date of the 5th anniversary of the Issue Date. Non-voting Redeemable Preference Shareholders wishing to exercise their put option on all or part of their holdings must notify CM Equity Linked Products Ltd of their intention at least 30 days prior to the Put Date.

If you do not exercise your put option at the end of year 5, your Non-voting Redeemable Preference Shares will be redeemed by CM Equity Linked Products Ltd in year 6 at 105% of the Issue Price, i.e. at a premium of 5%, subject to no BHI Event having occurred. No dividends are payable in year 6.

Illustration: If you invest EUR 10,000 (10 shares at EUR 1,000 each):

Targeted dividends (payable semi-annually) are expected to be as follows:

Year 1: Interim dividend of EUR 150 and final dividend of EUR 150

Year 2: Interim dividend of EUR 200 and final dividend of EUR 200

Year 3: Interim dividend of EUR 250 and final dividend of EUR 250

Year 4: Interim dividend of EUR 300 and final dividend of EUR 300

Year 5: Interim dividend of EUR 350 and final dividend of EUR 350

Year 6: No dividends

Redemption proceeds:

End of Year 6: Redemption proceeds of EUR 10,000 x 105%, i.e. EUR 10,500

There are four options available if you wish to sell or exit your investment:

1. By placing a sell order on the Stock Exchange of Mauritius (at prevailing market price and subject to finding buyers).
2. By requesting an early exit (subject to a 10% aggregate limit), available once a year on each anniversary date up to Year 4 after anniversary date.
3. By exercising your put option on the 5th anniversary date of the Issue Date.
   
4. By redemption of the shares by CM Equity Linked Products Ltd at the end of Year 6 from the Issue Date.

Additionally, CM Equity Linked Products Ltd may call the Non-Voting Redeemable Preference Shares at a price of EUR 1,000 per share at any time up to the Redemption Date. This option is at the discretion of the Issuer and not the Investor.

Dividends are not guaranteed. The targeted dividends, subject to the Companies Act 2001 and the BHI Events, are as follows:

Year 1: EUR 30

Year 2: EUR 40

Year 3: EUR 50

Year 4: EUR 60

Year 5: EUR 70

Subject to BHI events, targeted dividends are paid semi-annually in the form of an interim dividend and a final dividend.

Interim dividend: equivalent to 50% of the targeted annual dividend and is payable regardless of any dividends being earned from BHI on the Class D Preference Shares.

Final dividend: equivalent to 50% of the targeted annual dividend and is subject to the quantum of dividends declared by BHI on the Class D Preference Shares.

In the case of a BHI Event (as defined in the Prospectus) having occurred, dividends may be suspended.

For individual investors, dividends received and any gains realised on the Non-Voting Redeemable Preference Shares are currently tax-exempt, subject to any fair share contribution provisions. This may be subject to change without further notice and investors should seek independent advice on their own tax position.

No. You may subscribe to the Non-Voting Redeemable Preference Shares even if your bank account is not held with MCB. However, investors with non-MCB bank accounts will be required to submit a manual application, as access to our online subscription portal is currently available only to MCB Juice users.

A CDS account is mandatory to hold the shares. If you do not have a CDS account, MCB Securities Ltd will open an account free of charge for you using details provided in your application documents.

There are no transaction fees payable upon subscription. However, in the event of a repurchase of your shares through an early exit or put request, a transaction fee as prescribed by the Stock Exchange of Mauritius (SEM), will apply. This fee will be deducted and reflected in the settlement amount payable.

In case of an oversubscription, CM Equity Linked Products Ltd will determine the allotment criteria and any excess application monies will be refunded without any interests and net of bank charges to your bank account within five (5) Business Days of the Issue Date.

MCB Securities Ltd, as Sponsoring Broker, requires that all prospective investors undertake a Suitability and Appropriateness assessment before subscribing to the product so that they can make an informed decision based on their risk appetite and tolerance as well as on their understanding of the product features.

No. The subscription process requires that you fill in and submit an application form either manually or via our online subscription platform.

For an individual investor subscribing manually or via the online subscription portal, the following is required:

(1) National Identity Card.

(2) A utility bill (less than 3 months old) in the name of the applicant.

*The birth certificate or marriage certificate will also be required only if the utility bill is in the name of the parent or the spouse.

(3) A proof of bank account (IBAN or upper part of a bank statement).

Non-individual investors should contact MCB Securities Ltd to obtain the list of required KYC documents