Forum Archive Index - May 2001

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

>
> $5.50 - it that all.  Useless.  After the positive announcements
> last week you would think they could obtain a better price.  TEL is
> certainly showing us their successful negotiation skills.  Well
> done.  Couldn't they negotiate a price closer to its closing price? 
>
>
No.  They tried that last week and failed   It would seem most of the 
institutions about the place have their fill of Telecommunications 
companies thanks. 
>
> 
> How much value has been destroyed today with the 4% drop in price? 
> I recon about $580M (No shares 1,759M x 33c drop).  
>
>
Well let's see, with 91m new shares issued....
(1759+91=1850):
  
1,759m shares X 5.92 = $10.41b market captitalization.
1,850m shares X 5.59 = $10.34b market capitalization.

Not a huge difference.   Less than $100m in fact.

But around $580m of value *has* been transferred from existing 
shareholders to those that took up the new issue :-P

>
>Are they panicking about something?
>

No.  Their shortage of capital has been well known to the market for 
months, and the market has been expecting something like this.  I'd 
say there could be more capital raising like this in the future too.

The alternative is a cash issue which would probably make the 
TEL share price plunge even more.   The capital shortage is the 
main reason why Telecom NZ is 'apparently' so cheap. SNOOPY




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