Ann: Arrow Awarded Licence for Surat Gladstone Pi, page-19

re: Ann: Arrow Awarded Licence for Surat Glad... Sung

Assume AOE is trading at $4 and has 1 billion shares on issue (trying to make things simple). Thus AOE is worth $4 billion ($4 per share times $1billion on issue)

Assume they do a rights issue on a 1 for 4 basis at $3 a share. This means that in total AOE will issue 250m new shares (1 billion divided by 4) and raise $750m. Arrow is now worth $4.75 billion (previous value of $4 billion plus $750m cash raised). There are now 1.25 billion shares on issue, so new share price will theoretically be $3.80 ($4.75 billion dividend by 1.25 billion shares). Obviously, if you take up the shares you are theoretically no worse off. If you do not take up the shares you are worse off as shares have fallen in value by 20cents.