New Rights Offering So I've got quick thoughts and info on the just posted offering, based on my experience last time...
The offering of shares is 15.65 the current price is 17.78 this means upon purchase of your right should it be today you would gain 2.13 cents per share instantly or 13.6% gain right away and would have an 8.69% dividend yield.
Ive posted before that in my opinion fair value is at about $17, last time about 6-7 years ago they did a similar offering when the price was relatively over bought and I made out like a bandit on this! Last time what happened is that your rights will appear in your account under a new symbol and will have a minor price value to them and are tradeable, they are subject to same trading fees as a regular transaction so be aware of that. You can purchase more or sell yours. If you are holding at the completion of the offering period, you contact your broker (or they contact you) and you accept the offering and pay the 15.65 per right you own and you receive a regular common share on a specific date.
Last time and likely this time, the common share price will drop because obvious this is a dilutive process of around 5%, so the shares likely drop in the 16-16.50 range for a few months. Thus the numbers I posted above on the instant gain will be about cut in half so between 6-8% likely.
I made an earlier statement I personally wouldn't purchase new shares myself due to my current portfolio situations unless the price was around $13, but this is a different situation I will very likely be taking advantage of depending on price movements and the rights pricing. I don't remember what the pricing was of the last rights on the market were, but I bought a bunch, more than I had the finances to be able to activate, so I learned a lesson there.
Be aware of the current share price is below the offering price at the date of redemption it isn't worth redeeming as you would be purchasing a loss. This is unlikely to happen, it's more likely that the current price will drop more after the conversion which would be a piss off, but again not likely to happen.
I could be wrong but the last offering was even more dilutive, I believe it was 12-1 or 15-1, I believe the price stayed relatively flat for a few quarters after the rights were converted but there was a spike in volume of shares moving, likely as people who converted sold some off to take the instant profit and rebalance thier portfolios.
I was very new to the process last time and I struggled to understand some things associated but gained the experience and expectations. I hope the information I've given will help those who haven't been through a process like this before.
For those that are more experienced than myself, I'd like to know if a non-existing shareholder is allowed to purchase these rights on the market and are able to activate them freely on the date. I haven't thought about looking into other companies doing this, but now that it's come up again I'd be interested in taking advantage of other situations that pop up if it is fair game and in general learn more info that someone has.