Some more info on the Prima SPP ... time for a cuppa
... apologies for the lngth of the post ... but hopefully it will help clarify some of the unknowns ...
Why are we limited to 15 K on the SPP ?
The maximum value of shares an individual investor can purchase through a SPP is set by the Australian Securities and Investments Commission (ASIC)
... the reason why Prima Biomed are only offering a limited amount of shares is that ASIC has a monetary limit for share purchase plans to $15,000 for each existing individual shareholder in any 12 month period
... so why we may be a little upset we cant get more PRR through the SPP ... legally we can't. ( bugger )
Oversubscription ?
... in the event of an oversubscription ... the scale back will be undertaken on a pro-rata basis, with each applicant receiving a set percentage of the value of Prima Shares they applied for in the offer, subject to each applicant receiving a minimum allocation of shares.
Why an SPP ?
Share Purchase Plans are an inexpensive and quite simple way for companies like PRR to raise capital. ....and quickly
... A key reason they are cheap is that there is no legal requirement for the offering company to produce a prospectus...... No prospectus means no expensive teams of bankers, lawyers and accountants
... Also, because the offer is to existing shareholders only, the company does not have to pay big commissions to brokers and investment banks.
And it?s because of this absence of a disclosure document that ASIC puts a maximum limit on the value of shares that each shareholder can take up through a SPP.
it somewhat provides some investor protection .... by capping the size of an investment... just in case things go pear shaped.
... the shares are offered to existing shareholders at a discount to current market price as an enticement to invest ... a teaser
... and of course no brokerage fees are applicable
What's the ' paper ' Profit ?
... a $15,000 package of PRR , purchased @ $0.028 equates to 53,571 PRR shares.
... and based on today's close of $0.335 this represents an instant paper profit of (53571 x $0.055) $2946.00 on the the full $15,000 investment
.. assuming the share price does not fluctuate before
... The anticipated issue size of the Prima Share Purchase Plan is not necessarily the actual amount raised, since the number of shares issued under the SPP is not known until allotment.this is common practice.
... PRR has disclosed the anticipated amount the firm can raise which is subject to ASX Listing Rules and ASIC restrictions.
What usually happens on a cap raising SPP ?
... there appears to be inconsistent evidence regarding the relationship between the issue price discount and the market reaction to the offering, so no directional prediction can be made.
... Companies prefer to wait until they believe the stock is no longer undervalued,... and a firm will issue equity when conditions favour an equity issue .... ... and on the cusp of a Prima Nasdaq listing.... this deemed positive creates such a ' favourable condition
How many can I get ?
SPPs offer existing shareholders the opportunity to pay a fixed maximum dollar amount to subscribe for additional shares.... .... The offer is not on a pro rata basis but rather it is an equal entitlement independent of the number of shares already held.... ... soit looks like every shareholder will be entitled to the $15K allotment if they want ... if they are not oversubscribed
Why not in the US ?
SPP is generally restricted to shareholders who are residents of Australia or New Zealand. This is for practical reasons as well as the fact that offers of this nature are illegal in some foreign jurisdictions... eg USA
Why the institutional investors get a first crack at the shares ?
... because PRR is provided with the benefit of a fast and certain outcome to raising capital and, based on their professional assessment and advice, at the smallest discount. ... the $028 price would have been stuck ... because it is achievable.
... they assume more risk as they cannot observe the market reaction following their uptake of shares ... we get 1 more month to observe ..
Why do we get our shares after the Intitutional investors ?
... because it is accepted good investment practice ...
and through the SPP process retail shareholders get the benefits of ..
... Knowing the price and level of support associated with the institutional share placement....
... observing market conditions and share price reaction in the days and weeks following the placement to institutions before deciding to participate;
... greater time to consider their financial position and take advice....
... this makes it much easier for retail shareholders to come to an informed and appropriate decision in relation to participation....
Where to from here ?
.. so we're heading... fast tracking in the right direction now... less uncertainty
... it wil be a most interesting and exciting few weeks ahead... and if there are the anticipated further positive announcements forthcoming ... reckon she might just go off the dial ...
.. remember the 30 - 35 bagger ?
... PRR ... will be the Lifechanger
PRR Price at posting:
28.4¢ Sentiment: LT Buy Disclosure: Held
(20min delay)