Ainsworth Lumber Co Ltd ANSBF

Question Rights sale

[louel]

What advantage is there for the purchaser buying rights rather than shares at Ex right market. if they are calculated Ex rights price - Rights exercise price = Right sale value. If the Market is climbing from Ex rights price. The owner would simply exercise then sell the common shares keeping the profit. First buying rights then having too exercise would incur double trading fees. There for I would suggest Rights would have to be discounted by some amount to make them desirable.

Asking because I am not familiar with rights trading.

3 Sell your rights to other investors
In some cases, rights are not transferable. These are known as "non-renounceable rights". But in most cases, your rights allow you to decide whether you want to take up the option to buy the shares or sell your rights to other investors or to the underwriter. Rights that can be traded are called "renounceable rights", and after they have been traded, the rights are known as "nil-paid rights".

To determine how much you may gain by selling the rights, you need to estimate a value on the nil-paid rights ahead of time. Again, a precise number is difficult, but you can get a rough value by taking the value of ex-rights price and subtracting the rights issue price. So, at the adjusted ex-rights price of $4.92 less $3, your nil-paid rights are worth $1.92 per share. Selling these rights will create a capital gain for you.


Read more: https://www.investopedia.com/articles/stocks/05/062905.asp#ixzz2DpIRPfiR

[repap_nb]

My quick response would be the rights have more leverage. They should move with the stock price so if the stock goes up 50 cents the rights should as well.  The gains or losses are higher with the rights if you think ANS is going up over the next few weeks you would buy the rights

[specboy2011]

I thiink you are all missing the huge dilution effect.Earnings per share etc are all a lot less once this stuff all happens.Yes ANS has great plans to expand etc to create further shareholder value but its not there yet.

[[e-mail]]

ANS already owns the facilities for expansion. Another thing most have not mentioned is ANS employs around 500 less employees than they did in 2009. The dilution effect will no doubt affect the share price but the up side is still significant.

[louel]

 When a company does a rights offering the dilution is calculated into the Ex Rights price.   Formula:   Current shares  price  +  Rights price divided by 2 = diluted value of share price.  You can work it out on 1 share from each or the total shares it is the same.  Diluted price is always the average of the combined total.   What is not factored in is

[thedave2006]

yep, may be an overhang until rights offering is done.  also, brookfields or an arm of their business who owns 55% of ANS shares fully backstops the rights offereing, meaning they will make sure it is fully exercised via their rights and other rights that are not exercised, they will buy them up and exercise....????   cheers, dave.

[Tobuyornot]

Now I am confused.   ANS.RT first trade at $1.75 and ANS drops .75.  On 1k of shares that's up $1K

[Tobuyornot]

I took that as best I could!  Still out of whack...