Forum Archive Index - November 2000

["nick" <acummin@es.co.nz>]

                This is false logic in the longterm.

      After five years the preference shares become ordinary shares.

theresfore it would be better to buy the normal shares at any price below

25c than it would be to take up the rights.  There are only three reasons why

anybody would take up the rights.

 

   1. you believe  the head shaes will not at any time drop

       below 25c  (big ask)

   2.  you believe there is a chance of recievership   (i dont)

   3.   you plan to sell off the preference shares as soon as they

        rise in price.  (they might not)

 

 

      hope this clarifies the situation a little.

 

 nick

 

 

          

 

 

 

Just be aware the "head shares" will form only 1/3 of the total shares after recapitalisation & will rank LOWER as the new shares are preference.

Therefore the new shares should be priced higher than the head shares. The head shares could  fall below 25c without the cash issue being in jeopardy.