Forum Archive Index - July 2002

["Peter Riches" <peter@kairos.ws>]

Thanks Malcolm. I had forgotten about the dividends. According to my maths
the market price matches the theoretical price almost exactly when the
dividends are considered:

Approx. theoretical price ex 7.09 cent dividend = 96-7 = 89 cents
Dilution effect = ((89*6)+82)/7 = 88 cents (= theoretical price ex rights
and dividends)

Subscription price + rights price = 82+6.5 = 88.5 (= current market price)

Interesting to note that, according to the rights invesment statement, the
net asset backing after the rights issue will be $1.05 per unit. This means
that at 88 cents KIP would be trading at more than a 16% discount  to NAB. I
believe this is more than twice the discount it was trading at before the
rights issue was announced. Wonder how a 16% discount to NAB compares with
other property shares? Seems quite a big discount for what seems to me to be
a quality share that is paying around 11% dividends per annum?

Peter


> Peter Remember it goes ex a very large dividend at the same time


> >Greetings share-chatters
> >
> >Can anyone explain the maths involved in the current KIP rights issue:
> >1 rights issue for every 6 units held
> >Subscription price = 82 cents
> >Rights are trading at about 6.5 cents
> >Head share is trading at 96 cents
> >
> >Why are the rights trading at 6.5 cents - does this imply that the market
> >expects the ordinary unit price to drop to around 89 cents once the
rights
> >cease trading? Is this a premium or discount to the theoretical price?
> >
> >Thanks in advance
> >
> >Peter
>
>
>
>
>
>
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