Ann: PAR Successful Placement and Fully Underwritten ANREO, page-74

So....

Anyone who follows the markets regularly will have worked out, at the top end of the mkt, when big capped tocks do discounted offerings, they tend to trade near the diluted theoretical price of the shares on pre-rights value vs post-rights value. Unfortunately, as I learnt many years ago the hard way in small and micro caps, they tend to trade nearer the retail offer price. Very simply explained, the big insto's have big pockets and know value, small retail don't and will not pay more than that they can get on entitlement.

So if PAR was a nice, well covered (brokers), less risky, cash flow positive company trading at a $173 billion market cap (282 billion shares at $0.615) before the offer and it sold 42 billion shares to Insto's, its theoretical fair mathematical value thereafter might be:

($173 billion + [42 billion shares x $0.43 discounted offer shares]) / (282 billion + 42 billion shares) = $0.59 => $191 billion mkt cap (the value of the company before the issue plus the cash)

i.e. all things being equal our theoretical big capped PAR on a pure valuation basis, all things equal, might trade near $0.59 after such an Insto deal as that would approximate to the same value with the new cash on the balance sheet, but also the share dilution.

Now if the big insto' traded brother of PAR also offered a retail shareholding of $12 billion in addition to the $18 billion to Insto's, presuming 100% taken up, it might then theoretically be discounted on a value basis to:

($191 billion + [28 billion x $0.43]) / (324 billion +28 billion) = $0.575 => $203 billion mkt cap (value of post insto company plus retail cash).

So from a purely mathematically rationale the stock might trade something approaching $0.575. The reality even in big ASX listed companies, few retail investors willing to pay $0.57, or $0.55 if they are paying $0.43 on entitlement. Similarly, some big instos' perhaps willing to sell out some of the $0.43 buys for a quick little profit. But they will tend to trade something approaching the theoretically larger by cash asset value over new diluted share value, stocks trading more on valuation basis.

Then we have crappy retail stocks like PAR. Just replace the billion with a million and they trade at a crappy $0.43 or offer price, as displayed this morning by PAR. Did I mention I hate retail entitlement offers in small caps? "But the mum's and dad's?"....could go and buy on market at lower prices to the previous trading day and see their stock holdings less decimated!

Sorry kids, but that's the usual reality at this end of town in such raisings. I wish I was wrong. Take a look at a decent sample of past cap raisings on small/micro capped ASX listed stocks that support this.

(this is not financial advice, blah, blah, blah, notice the use of the word might, blah, blah, blah, but pretty common mathematical sense and obvious to anyone with a brain who regularly follows these things, etc - feel free to correct my figures anyone, I get no upside in this and am just trying to help the less seasoned shareholders feeling hard done by this morning, just be grateful they are not doing the popular VWAP offering that became trendy [encouraged?], OMG that is a basic case of stock price peril for far more complicated reasons, IMHO)