Yes the insto take up is a interesting one. I wonder whether they have sufficient time to really assess the deal (they only get a day). I suspect, but I am only guessing, many of them just look at TERP (the theorectical price the stock should tarde post raising based on what it was trading on before the raising)which in this case was . That's a a big drop from the trading price pre issue, and that's what they should at least expect to loose on their existing share holding if they don't participate. If they do participate, and the stock does trade at the TERP then have have lost nothing, what they loose on theoir existing holding they make up on their new secuties (profit x cents minus 17cents cost). So I think many of the institutions say yes based on limited research, and then take time to digest the information and if they don't like what they see then sell down later.
With regards to the retail component, if UBS are smart they would have already got this sub-underwritten by instituitions, perhaps David Grey. If UBS haven't got it subbed by long term holders then the stock will not break through 17 cents mark for some time.
Cheers
APZ Price at posting:
$1.70 Sentiment: None Disclosure: Not Held
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