Value of a Rights Issue of shares.

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December 2, 2014 at 12:10 pm #215956
debbieche
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Exiting shares 4m valued at $2.8/share.

Rights issue of 1 share for every 3 shares at $2.0.

What is the value of a right?

TERP = $2.60/share

Is it the Theoretical ex price – issue price?

which is $2.6-$2.0 = $0.6

Or $2.8 – $2.6 = $0.2
am confused
December 2, 2014 at 1:40 pm #216004
John Moffat
Keymaster
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The value of a right is the TERP – issue price. So for this question, $0.60.

(It is 0.60 for each new shares, or alternatively 0.60/3 = 0.20 for each existing share)
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