Forum Archive Index - May 2001

["tennyson@caverock.net.nz" <tennyson@caverock.net.nz>]

Hi Jeff,

> 
> re SUB announcement of rights issue, Michael Phillips wrote:
> *******************************************************
> As I understand it, NCM rules are going
> to require the rights to be issued at an average of the last 20 days
> trading.  This will move the issue price from 30c per share closer
> toward 40c per share.
> *******************************************************
> 
> I don't understand what effect this will have on the market price.
>
>
Don't you?

>
> With the extra shares taken up under a rights issue, won't that
> dilute the total issue and the market should react accordingly with
> a lower market price?
>
>
Yes, sounds logical.

> 
> Also what advantage would there be for a holder to buy extra shares
> through the rights issue when they are available on the market for
> roughly the same price ?
>

None -to you.   Maybe if the issue is underwritten (which I'm sure it 
must be) it is a way for the underwriters to buy into the company at 
a better price than existing shareholders, before the whole 
rights issue matter blew up?  And because the issue is non 
renouncable the existing shareholders cannot financially benefit from 
the manoeuvres?

> 
> I'm confused about this one and hope someone could please answer my
> questions!?
>

You are too modest Jeff.   I think you actually see exactly what is 
happening here.   No confusion.   Everyone has the right to 
draw their own conclusions on the facts as published.  Perhaps yours 
might be that you, along with the existing shareholders just got 
shafted?   Have a nice day.  SNOOPY



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