the rights are being offered at 68c. bfg was trading around...

the rights are being offered at 68c.
bfg was trading around 80-84c pre trading ex rights.
the placement is approx a 10% dilution from memory.
fair value is therefore calculated by taking the vwap of bfg shares at around 82c then diluting 10% to 74c to get an idea of the adjusted sp after 10% dilution. the right should then trade at approximately the gap between the offer price of 68c and the implied fair value of 74c.

in other words, the rights are currently valued at 6c because if you pay 6c this gives you the right to buy a share (worth 74c) for 68c.

meanwhile the rights price (bfgr) doesnt affect the sp because the sp is still the value of the company after 10% dilution, so sp may drift down towards 74.

now to confuse matters further, all that i just outlined above assumes that:
1) the eps is unchanged after the equity raise and
2) that the company was fairly valued before the equity raise.

i disagree with both these assumptions because the trading platform purchase will result in increased profits of around 1-2mill before tax which will flow through to increased eps, and i think given bfg trades on a projected p/e under 10 with a hige divi, the company is undervalued
.

therefore it is teasonable to buy rights at any price if you believe the rights price + the offer price (68c) is a good purchase price. i believe fair value for bfg is at least 90-100c therefore i believe any right price under 20c is still good value. i guess it will trade around 8-10c which is a good value buy, as are thethe shares directly at 76-80c.