1. avatar says

    …if rights issue is for existing s/holders only ,- how can Vita buy the letter-rights? or how can she buy the rights at 4.60 directly on the market exch … referring to point made that in real life the value of rights probably be lower at 1.58 rather than 1.60 as per calculation
    I am very puzzled by this, could you please clarify, the rest is clear as water , thank you , really glad I found this website!

    • Profile photo of John Moffat says

      @balcune1, Although the offer of new shares is made to existing shareholders, the shareholders can sell the letter (the rights) to other people.

      Vita can buy the shares directly on the stock exchange at the ex-rights price and so there would be no point in real life for her to buy the rights at 1.60 and then buy the shares by paying 3.00 to the company – it would be less hassle for her simply to buy the share on the stock exchange for the same total cost!

      To encourage people to buy the rights, they would be priced slightly lower.

      • Profile photo of abeers says

        @johnmoffat, But, if it’s a rights issue, will it be quoted on the stock exchange :S Or will it be offered to existing shareholders only?

      • Profile photo of John Moffat says

        @abeers, Although the rights are offered to existing shareholders, the new shares are the same type of shares as the existing shares and will continue to be quoted on the stock exchange.

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