Ann: RENOUNCEABLE ENTITLEMENT ISSUE, page-45

Renounceable rights is where you can trade your “right” to participate in the capital raise.. at its very basic level, it’s designed to allow existing shareholders an opportunity to derisk their dilution and opt out..

So as a real world example, I have 1.5m shares in magnetite mines (MGT).. who are in the middle of a renounceable rights issue right now @ 1:4.. and at the record date I have 1.5m shares..

So I have an allocation of 375000 shares as part of the CR that I can trade with the public under the ticker MGTRD until September 29.. those shares are not fully paid ordinary until the rights issue closes and the company receives the capital for those shares..

So I can do a couple of things, I can:

A) Do nothing and those rights will disappear along with my entitlement and whatever options, then I cop some dilution..

B) Take up my full entitlement and options by paying the company 1cps for my 375000 shares and they will become fpo shares once the rights issue completes..

C) Sell a portion of my rights on market under the MGTRD ticker and take up the rest depending on my strategy..

D) Sell all my rights on market under the MGTRD and take some cash to offset the dilution or accumulate more if I wanted to go above and beyond my allocation without applying for a shortfall depending on my strategy..


This is a basic overview, I haven’t gone into detail about the how it all takes place, but hope it helps clarify a couple of things