Feb 12, 2010
GIC's paper loss on UBS
It will convert $14.5b of notes to shares at price that would show loss
By Gabriel Chen
THE Government of Singapore Investment Corp (GIC) will convert its 11 billion Swiss francs (S$14.5 billion) worth of UBS notes at a price that may show a 70 per cent paper loss in its investment in the Swiss bank.
GIC will exchange the mandatory convertible notes that it bought two years ago for 230.7 million ordinary shares in UBS on March 5, according to a regulatory filing with the United States Securities and Exchange Commission.
This would mean the conversion price would be at 47.7 Swiss francs a share.
At Wednesday's closing price of 13.67 Swiss francs for UBS shares, these shares would be worth just 3.15 billion Swiss francs, or around 7.85 billion Swiss francs less than its original investment of 11 billion Swiss francs.
GIC declined to comment yesterday.
Under the original agreement, the minimum conversion price was 51.48 Swiss francs and the maximum 60.23 Swiss francs, but GIC had said there was a reset due to certain anti-dilution clauses.