Thunderhead1, the arb opportunity is definitely worth it. A 1.62% return or 9.78%pa. 9.78%pa is well above Cash and Corporate Bonds, for a small additional risk. If there was volume at 29c, hedge funds and investment banks would be parking their cash there for 2 months. I managed to get plenty after 3:15pm on Tuesday at 29c, but am now struggling to get any at all at 29c since yesterday morning. So far, just 1 share which shows you much buying power there is. Instos can trade at the midpoint at 29.25c; which is only about 5%pa; but 5%pa is still worthwhile when Cash is 3%pa (although I personally wouldn’t bother for 5%pa).
The Tuesday 3:15pm announcement was the key. History shows that when the Scheme Booklet is released, the Scheme is very unlikely to fail (unless there is a problem with the 75% threshold).
The 29.5c open yesterday does not indicate a higher bid is coming, although it would be nice if it does. The explanation is simple. Me and many others put in bids at 29c at 7am yesterday morning to gain priority in the 29c queue. Others seeing that there were plenty offered at 29c, wanted these and so bid 29.5c, but less than the amount offered at 29c, so that he opening price (which is an auction like the closing price) would be 29c and he or she would get nearly all the stock and only pay 29c and then leap ahead of all the others sitting in the screen at 29c. This happens all the time.
But someone pulled a small bit of volume from the 29c Offer seconds before the auction, so no-one was quick enough to react. Therefore, the volume now was more at 29.5c Bid than 29.0c Offered, which meant that the auction price was now 29.5c. These “games” get played all the time.
The buyers at the open yesterday are cursing theirbad luck. Any further trades at 29.5c would be I suspect small in volume from an ignorant investor, or some intelligence suggesting another serious bidder was lurking around.
