Hey guys,I have been told that there is a fairly significant...

Hey guys,

I have been told that there is a fairly significant shortfall to the current rights issue (could be several million shortfall). The remainder of the shortfall will be placed by Patersons to sophisticated investor clients within the 3 month period.

This throws up a few questions and pros and cons.
- Why did people not apply for the rights issue, it had great value compared to the head price (when you count the options value). Somewhere in the region of 30-50% profit if sold straight away.
- I suspect some people stayed away because of the options, unfamiliar with trading them and of what they are worth
- This is a pro in that there will be significant less selling on the day the shares are released. People that took up their entitlement are more likely to be long term holders imo also.
- Con is the company will have to wait up to 3 months (but probably just 1 month) for all the shortfall to be placed to the soph investors.

We will have to see how the market reacts to this. In one sense there should be little difference if you assume the shortfall will be placed. But it makes you wonder why shareholders would have their stock diluted (by not taking up the offer) and let the sophisticated investor clients come in and clean up the profits on short term selling of the shortfall?