Ann: Race Oncology Share Purchase Plan Opens, page-178

@IndexInvestor

Theoretically, there should not be anysignificant drop in the share price. After all, RAC is diluted, but in exchangeit gets extra 30M cash. In fact, if you agree with management's vision then youmust also agree that this SPP adds significant value to the RAC enterprisevalue (therefore, market cap). Now it's a matter of perspective. Let's have alook at today's trading:

Previous trading day:
- Close $3.77
- Market cap: ~$530M

And today:
- Volume 1,579,4354 shares
- Value $5,209,408
- VWAP $3.298

So, the effective loss of value is $5,209,408 * (3.77 - 3.298) = 2,458,840.58 That loss represents 0.4% of RAC's market cap. And who incurs this loss of value? People who sold today. Furthermore, if the market was equally distributed, the SP should have closed at $3.77 * (100% - 4%) = $3.62 today. Nobody in their right minds would argue that we all incurred a 14% loss today, since almost nobody agreed to sell at a 14% lower price today.

Final point, if you take $30M SPP at a 20% discount you get $6M "giveaway" discount. That discount given to shareholders was quite in line to the effective loss. Tight gap! After all, the market may be more efficient than originally thought.