1) It makes no sense to talk about this as if UBS is going to hurt in any way as a result of what is happening. To them the size of this underwriting agreement is pennies. In any case, UBS will be looking at the value of this transaction the way we all should be: they don't care what the value is now, they care what it will be in 12 to 24 months.
2) Given that short-to-medium term view, this is an immensely clever play by UBS. Not only did they score 30% of the institutional rights, they are also set to pick up most of the retail rights without even having to pay the 0.1 cent per unit. Chances are they, and the other institutions that have been buying the rights, piled on hard at the start to get the share price avalanche started. It worked well too, given the doom and gloom that haunts this forum. It will be interesting to see what percentage of Arrium UBS hold once the rights are all settled.
3) Chances are that once the rights are settled and the new shares are trading, UBS and the other institutions that bought the rights will be piling in on the buy side to create the appropriate atmosphere of joy, relief and enthusiasm.
Given how nicely we all played on the way down, we'll be right here to help them along on the way up, won't we?!
ARI Price at posting:
36.0¢ Sentiment: Buy Disclosure: Held
