Ann: Race raises $29.7 million in oversubscribed SPP, page-272

The successful SPP has added lots of intrinsic value to RAC, I believe:

1. the threat of an impending cap raise has been removed. we all knew that a cap raise had to come pretty soon, and that threat of a cap raise puts a dampener on the share price.


2. $30m has been raised to fund important projects. these projects give RAC the chance to turn its wonderful potential to turn into actuality.

3. The SPP was over-subscribed by 50%….this adds a sentiment tick…it is better for a cap raise to roar in than limp in…

4. the cap raise rewarded the loyal, true-believer flock, which should add the extra value of further increasing the happy participants' loyalty down the track.

5. a serious effort was made to come up with an algorithm to intelligently scale-back the 50%-oversubscription to maximise the chances of the shares allocated going into the most sticky hands.
…

Let us assume this algorithm got it (mostly) right and will turn out to better than the easy option of scaling back every applicant equally in predicting whether allocated shares get sold off down the track. if this is the case, then RAC applying this clever algorithm is a big win for all of us RAC holders, regardless whether you got your full allocation or not.

why?

because we want the share price to go up, and what makes share prices go up is having strong buying pressure and weak selling pressure. if great news is announced, and hardly any shares are put up for sale, then keen buyers have to pay up.

we already have to stomach Bill Garner's daily dose of shares, the last thing we want is for SPP flippers loading up the sell side as well!

So instead of complaining about not getting your full allocation, or even getting less than the average allocation, be grateful that a hopefully valid and clever scaling algorithm has protected your future share price gains!