Let's wait and see the prospectus says (hopefully today). At 2 cents for the rights issue it gives all holders the chance to average in however they had better provide absolutely full disclosure in relation to the good news from current drilling and assays or else the board would find it hard to defend the 2 cent price. Its fair enough to offer 2 cents to existing share holders in a renouncable issue providing everything is completely disclosed, otherwise Allied will be accused of thieving it and the board will not be acting in the interests of all shareholders.
By the looks of the announcement Allied are effectively underwriting the full issue after existing shareholders are given the right to oversubscribe. That conveys at least some fairness, however if existing shareholders do not subscribe or oversubscribe, Allied will be able to take an additional 50% of the company by putting the full $11M in. Even if they only took up their rights and existing shareholders did not take up theirs, Allied could double its current shareholding. That would not be a good look if Allied were more informed than other share holders as to the potential upside of the current drilling.
I will be taking up my full rights regardless.
TAM Price at posting:
2.3¢ Sentiment: ST Buy Disclosure: Held
