"Dilution only suffered by any who choose not to take up their quota."
A common comment on hc but my understanding is that it is dead wrong, under the following reasoning.
Curently I have $x in Senex and hold y% of the issued stock.
If Senex goes ahead with an entitlement offer then my current holding is diluted whether or not I participate in the offer.
If I don't participate then I still have $x invested in the stock but own less than y% of the issued stock. That is my current holding has been diluted.
If I do participate then I will still hold y% of the issued stock but for that same percentage I have had to pay more than $x. In other words, my holding has been diluted.
About the only form of share creation that is not dilutionary is if bonus shares are handed out.
SXY Price at posting:
38.8¢ Sentiment: Hold Disclosure: Held
