spp, page-3

Hi all,

I'm a shareholder in ARG and MLT and like many other listed companies, they offer shareholders the opportunity to invest up to $5,000 p.a. via the SPP at a discount to market price.

My question is this: when these stocks are trading at a discount to their NTA, the SPP price is therefore less than the NTA. Does this not mean that buying shares in the SPP is disadvantageous to existing shareholders who do not take up the offer?

To explain: imagine a company with two shares outstanding, each with an NTA of $1. If they are trading at a discount such that the SPP price is $0.50, and I purchase two shares in the SPP, this means that the company's new total assets is $3, with 4 shares outstanding. Therefore I own 50% of the outstanding shares ($1.50 worth of assets), whereas the original owners' assets have been reduced from $2.00 to $1.50.

Hope to receive an explanation, because it seems like the original shareholders are being ripped off! Many thanks.