TSX:IBG.DB.E - Post by User
Post by
Steelironmanon Dec 01, 2015 7:00pm
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Post# 24344780
Rights Offering
Rights OfferingI don't get the advantage for the company of going through a rights offering.
Each shareholder gets 1 Right per share owned and at no cost to the shareholder.
He may then elect to buy new shares at $1.60 for each 4 Rights he owns.
In effect, this is the company selling 25% additional new shares at $1.60 when the shares were currently trading at about $2.60 when the Rights were issued.
There are 17.8M shares so if all the Rights are subscribed,
about 4.45M shares will be issued and the companywill raise around $7.2 M.
If the company just issued 2.75 M shares at a market price of $2.60, they would have raised the same amount.
This exercise just seems to lower the Book value of the company.
Anybody agree?