In my opinion, the board have some answers to give, but so do the bankers. Citi, UBS & Deutsche have an obligation to set forth a listing with the best chance of raising funds, and not causing distressed prices after the placement has occurred.
My guess only - but in my opinion, the selling we are seeing is the underwriters dumping stock they got stuck with. The underwriters of the rights issue guarantee the deal will get done. If the entire issue is not subscribed, then the underwriters own the stock at A$3.85. These guys do not take risk on lightly, and if they have stock that they are stuck with at A$3.85, then the least risky way to enhance profit and reduce risk, is to lock that profit in immediately.
So, if the underwriters have a huge amount of stock at A$3.85, they are likely to dump it at any price above that.
Not fair to shareholders, or to insto's that take up the offer, but this is the real world of institutional banking, and it is not a fair game.
Good news is that once these underwriters/issuers have completed the dumping into the market, the buyers can return quite quickly. It also puts a very solid floor in at A$3.85
Safest trade to me is buy anywhere near A$3.85 and expect solid returns within 2 or 3 months.
All my opinion/views only.
STO Price at posting:
$4.01 Sentiment: Buy Disclosure: Held
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