My main complaints about CRs is that they are frequently done at a price well below the prevailing SP, so that the SP is knocked down and usually takes months, sometimes years, to recover; and the lower price is often offered just to instos and 'professional investors' (code for Mates), not to existing holders; and the timing of the CR is often woeful, when the SP has already been knocked down by market conditions or company-specific problems.
Prudent and ethical companies plan well ahead and do a CR when their SP is high and before they actually need the cash, and they offer the CR price to existing shareholders.
Having a CR when the SP is low means issuing many more shares to raise the same amount of cash, resulting in the unnecessary dilution which we all detest. And in the long run, having more and more CRs at low prices progressively destroys the investment appeal and the market value of the company. And each time there's a CR, a big bite of the cash raised is eaten up by 'costs'.
AMI Price at posting:
12.0¢ Sentiment: Buy Disclosure: Held
A personalised tool to help users track selected stocks. Delivering real-time notifications on price updates, announcements, and performance stats on each to help make informed investment decisions.
(20min delay)