Using Funtastic as the most suitable example, a Bell Potter is likely to raise:
- around 15% of issued shares (87m existing number of shares on issue) from new shareholders, for approx. $4.5m; - another 40-50m shares for say $15m, by way of non-renounceable rights issue from existing shareholders, split between PRY/sophisticated investors and Retail investors ie a institutional and retail component.
Non-renounceable makes the shares traded when the offer opens on a 'cum' basis ie ineligible to participate in the rights issue.
It is likely the retail offer would be underwritten by PRY, just as Gerry Harvey underwrote the same retail component in the Funtastic raising, picking up any shortfall.
The retail offer would be open for around a month, whereas the placement would be done by Friday and the institutional offer by mid next week. Dividends would also recommence.
If PRY has given go ahead, PRY cements control over the company, which unfortunately removes any attractiveness VEI retained as a takeover target ie chance of competitive bid premium is forever lost. Equity dilution also removes high IRR upside play potential.
VEI Price at posting:
32.2¢ Sentiment: None Disclosure: Not Held
