| New Share issue - effect on current price [message #384808] |
Do, 04 Mai 2006 00:09 |
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I have shares in a company which today closed at 59.5p (down 2.5p on
the day).
A news item on iii says that it is proposing to raise 25 mln stg
before expenses through a placing of 46.73 mln shares at 53.5 pence
each, to allow it to continue its rapid expansion.
If this is approved does that imply there will be two classes of
shares, or if not what is the possible impact on the current price. On
the face of it, and assuming they stay at today's price, I would
presumably be better selling now and buying back in at 53.5 pence.
Leaving aside dealing costs, am I missing something????
Usual TIA
__
Richard Buttrey
Grappenhall, Cheshire, UK
__________________________
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| Re: New Share issue - effect on current price [message #384869 ] |
Do, 04 Mai 2006 21:38 |
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On Wed, 03 May 2006 23:09:11 +0100, Richard Buttrey
<chaos.theory.nospam.removethis [at] zen.co.uk> wrote:
>I have shares in a company which today closed at 59.5p (down 2.5p on
>the day).
>
>A news item on iii says that it is proposing to raise 25 mln stg
>before expenses through a placing of 46.73 mln shares at 53.5 pence
>each, to allow it to continue its rapid expansion.
>
>If this is approved does that imply there will be two classes of
>shares, or if not what is the possible impact on the current price. On
>the face of it, and assuming they stay at today's price, I would
>presumably be better selling now and buying back in at 53.5 pence.
>
>Leaving aside dealing costs, am I missing something????
What usually happens is that a placing below the current price leads
to a temporary fall in the price about the time of issue, and the
institutions who underwrote the issue, or took it up, try to make
money by off-loading the shares above the placing price.
Once this overhang has been cleared, normal business resumes, or not,
as the case may be. Don't forget that you will incur costs by selling
and buying back, and you may not be able to buy back at the lower
price.
--
Terry Harper
URL: http://www.btinternet.com/~terry.harper/
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| Re: New Share issue - effect on current price [message #385046 ] |
Sa, 06 Mai 2006 23:00 |
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"Terry Harper" <terry.harper [at] btinternet.com> wrote in message
news:qqlk52h1gg213rs1b9qrgg7k2hlc9ihaol [at] 4ax.com...
> On Wed, 03 May 2006 23:09:11 +0100, Richard Buttrey
> <chaos.theory.nospam.removethis [at] zen.co.uk> wrote:
>
>>I have shares in a company which today closed at 59.5p (down 2.5p on
>>the day).
>>
>>A news item on iii says that it is proposing to raise 25 mln stg
>>before expenses through a placing of 46.73 mln shares at 53.5 pence
>>each, to allow it to continue its rapid expansion.
>>
>>If this is approved does that imply there will be two classes of
>>shares, or if not what is the possible impact on the current price. On
>>the face of it, and assuming they stay at today's price, I would
>>presumably be better selling now and buying back in at 53.5 pence.
>>
>>Leaving aside dealing costs, am I missing something????
>
> What usually happens is that a placing below the current price leads
> to a temporary fall in the price about the time of issue, and the
> institutions who underwrote the issue, or took it up, try to make
> money by off-loading the shares above the placing price.
>
> Once this overhang has been cleared, normal business resumes, or not,
> as the case may be. Don't forget that you will incur costs by selling
> and buying back, and you may not be able to buy back at the lower
> price.
> --
> Terry Harper
> URL: http://www.btinternet.com/~terry.harper/
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