Assuming there is a cap raising coming, and assuming that, like GPT, you need to own the shares prior to the announcement, it could be an opportunity to participate in a heavily discounted rights issue.
If, like GPT, it is 1:1 at, say, 20c the question is how much will GMG SP fall towards that 20c mark before buying GMG becomes unprofitable.
Say you buy shares now at 32c, can get hold of another share at 20c via a 1:1 rights issue, then the average entry price into GMG for new shareholder would be 26c.
Given that equity raising would remove risk of company failure it would over the MT and LT be hugely profitable for new shareholders (despite SPP being NTA and EPS being dilutive)
Questions though:
1) What do people reckon a SPP would need to be priced at now? 2) What do people reckon the ratio would be; 1:1, 2:7, etc? 3) How much do people reckon GMG share price would fall ST post any SPP announcement being made?
Thoughts would be appreciated
GMG Price at posting:
27.2¢ Sentiment: Buy Disclosure: Held
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