I think a lot of market participants were surprised by the sudden drop of CPALL on Friday’s trading (it finished down 3% for the day), first thinking it was market related only for the counter to remain under pressure for most of the day.

So what happened?

CPF Announced its wholly-owned subsidiary, C.P. Foods Holdings Ltd (CPFH) will issue $290.4 bn bonds providing an option to exchange the bonds into CPALL shares @ a conversion price of THB 53.30 per share or redeem the bonds after year 2 or hold to maturity of 5 years.

Any real impact on the company?

Nope

Could there be an impact on the stock?

Yes, but only if the price goes above THB 53.30/share, there could be a maximum of 180 mn new shares in the market if all the bonds are exchanged into shares and that’s about 2%, and CPFH could actually choose to hold the shares of CPALL when conversion comes.

The stock market is a funny place at times