turning of the tide, page-20

DJ1,

I said A RENOUNCEABLE RIGHTS ISSUE, not a NON RENOUNCABLE ONE.

And that is the major difference.

The renounceable righst issues are usually issued at a discount to the existing shareholders in proportion to their holdings, and are usually underwitten and all taken up. They are issued as an incentive to the real long term and loyal holders and they are issued on 1 for 1, or 1 for 2, or a 2 for 5, and so on.

The advantage of that, is that individual holders are given the chance to participate and hold the same percentage holding they did before the issue. Besides, it is more fairer, because the professional who only buy a few shares before the issue has been opened and hold shares on a few different accounts for these purposes only, they are not able to rort the system and get an advantage at the expense of the long term ones.

As a matter of facts, there are investors who only hold say 100 shares in a few different account names, and still apply for the usual entitlement of say a maximum of $15k dollars, just the same as the holders who owns say tens of thousand or even hundreds of thousands of shares. Is that fair???
Or does it act as a disincentive to participate to the real investor when he doesn't know for sure if his offer/application is going to be fully taken up and possibly wait for weeks to get his excess application money refunded.??

The rights in a renounceable share offer, are available for sale in the open market and the investors who cannot afford to take up their entitelements, can sell them and get some benefits as well. The people who buy those rights can then buy the shares they represent. And not a single one more.

These types of CR are usually very successfull, (not like the non renounceable offers), and offer awards/incentives to the real faithfull and long term investors.

I hope this will help.

Please DYOR.