If it is a rights issue will it be non renouncable or renouncable? I.E. Will a shareholder be able to sell their rights on the market or will they only have the choice of taking up their share entitlement/part of their share entitlement or letting the rights lapse?
Indicative open at thsi stage is creeping higher...now $10.48.
" A Rights Issue is an issue of new shares to existing shareholders pro-rata to the current shareholding at a fixed price (usually at discount to market price).
If the company you have invested in announces a rights issue, this means that they are placing more shares in the market to raise capital. To encourage people to buy the new shares, they offer shares to existing shareholders, often with a discount to the market, as an incentive to take them up.
A rights issue is offered to all existing shareholders individually and may be rejected, accepted in full or accepted in part. Rights are often transferable, allowing the holder to sell them on the open market.
Rights can be renounceable (can be sold separately from the share to other investors during the life of the right) or non-renounceable (shareholders must either take up the rights or let them lapse. Once the rights have lapsed, they no longer exist.).
A right to a share is generally issued on a ratio basis (e.g. one-for-three rights issue). Key terms:
Subscription price per new share, or the call price. This is the cost per new share to you. Distribution ratio this is the ratio of nil paid rights you will receive on ex-date, e.g. 1 nil paid for every 20 shares held. Because the company receives shareholders money in exchange for shares, a rights issue is a source of capital.
The new shares issued are called nil paid (as they are not yet paid for). Shareholders receive a nil paid allotment letter from the company, indicating how many nil paid shares the shareholder has been issued with. These nil paid shares are traded on the stock exchange, pricing around the difference between the market price and the issue price. Nil paid shares commence trading on effective/ex date. The shareholder has up until the Last date for acceptance and Payment to pay for the nil paid shares if they decide to take up the rights issue
Source: Rights Issues Explained | Shareholders Portal http://shareholdersportal.co.uk/corporate-actions/rights-issues-explained#ixzz0tjLDdDQA
RIV Price at posting:
$10.20 Sentiment: Buy Disclosure: Held
