Xidelang: worrying warrants (2)

The company announced the following:


Reference is made to an article published in The Edge Malaysia dated 20 July 2015 stating that no adjustment was made to the exercise price of XDL’s outstanding warrants 2014/2017, which have been issued by the Company on 24 January 2014 and are expiring on 22 January 2017 (“XDL-WB”) following the completion of the Company’s recent bonus issue of warrants on the basis of one (1) warrant for every three (3) existing ordinary shares held (“XDL-WC”) (“Bonus Issue of XDL-WC”).
 
The Company wishes to clarify that any adjustments to be made to the number as well as exercise price of XDL-WB shall be based on the provisions specified in the deed poll of XDL-WB dated 9 December 2013 (“Deed Poll”).
 
Pursuant to Condition 5.1.8, Third Schedule of the Deed Poll (relating to issuance by the Company of any securities convertible into or with rights to acquire or subscribe of shares, which in this case is XDL-WC), the exercise price of XDL-WB will be adjusted if the exercise price of XDL-WC is less than 90% of the five (5)-day weighted average market price (“5D-WAMP”) of XDL shares when the exercise price of XDL-WC is determined.
 
Accordingly, the Company wishes to advise that no adjustments are required to be made to the existing XDL-WB’s exercise price based on the price fixing of XDL-WC exercise price of RM0.115 that was determined at the initial announcement of the Bonus Issue of XDL-WC on 15 May 2015, pursuant to the provision of the Deed Poll. The 5D-WAMP of XDL shares up to and including 14 May 2015, being the date immediately prior to the announcement of the Bonus Issue of XDL-WC is RM0.1048.


The Edge never indicated that Xidelang had broken any rule by not adjusting the exercise price of the WB warrant, in the contrary.

The question is about fairness. Shareholders will receive free WC warrants (something that has real value), while WB warrant holders get nothing. And apparently, the company can continue issuing new warrants without any benefit for the WB warrant holders as long as the exercise price of new warrants is 90% or more of the 5-day weighted average market price.

Added to that, if members of the Board of Directors of Xidelang would have owned a large amount of WB warrants, would they have made the same decision regarding the exercise price for the WC warrants, or would they have chosen a lower amount so that the exercise price of the WB warrants would be adjusted downwards, making their WB warrants more valuable?

I have tried to find the deed for the WB warrants on the website of Bursa announcements, but could not find it.