Not much volume of stock has transacted in the ex-rights period....

Not much volume of stock has transacted in the ex-rights period. Roughly 4.0 million shares have traded since it went ex-rights, which is less than 1.64% of the old shares on issue - most traded at $0.11 or higher. (I was too dimwitted to get any of the stock that transacted briefly at $0.105 last Wednesday.) Why anyone would be selling at $0.105 in the rights acceptance period is beyond me, at least on an investment basis. If they were trying to spread foolium that is another matter. I hope it is not a the case that they know something the rest of us don't.

I have not had a phone call asking whether I intend to take up the offer, as sometimes happens with rights issues. Given that the issue is fully underwritten, I guess the company doesn’t care that much. If the underwriter gets stuck with a lot of shares, the price won’t go anywhere while the underwriter offloads the stock. But the underwriter wouldn’t have offered to underwrite the issue just for the practice, so it is reasonable to assume that the underwriter judged that enough of the stock will be taken up and that they will be able sell what’s left, at a high enough price, in a short enough period, to make a return, and move on. From the offer document, it looks like the underwriters fees, at a maximum, are less than 5% of the issue. So if the underwriter gets stuck with all the shares, they could not sell them at $0.105 (ie a 4.5% discount) without wiping out their fees. If they are stuck with a smaller proportion of the issue, then they could offload at below the issue price and still take something away, but I am guessing that $0.11 (or higher) is the figure they have in mind. But if they need the cash for another juicer imminent prospect, then I suppose they might sell it down.

The new management at BSA seems to have done the usual thing that new management does, which is to beat the bushes for anything that they even remotely suspect might be ordure and write it down, so that they start their tenure from a low base. At this point, I sure hope that’s what they have done, because anyone who has taken up the rights will be "very disappointed", if they come out with a contract overrun or some such.

Lanyon evidently paid an average of $0.1279 to move from a holding of 5.31% up to 7.94% of the stock as declared in their notice on 5 Sep 2014 (admittedly that was pre-issue). Presumably they thought it was value at that price. Bear in mind that most of that buying predated the FY result, which when it arrived, lifted the gloom a bit. However, even starting at say, Lanyon’s average purchase price of $0.1279, the theoretical ex-rights price (TERP) should be about $0.118.

At 11:48am today, 496,273 shares traded at $0.11 in one block. Was that a case of dumped, or snapped up, or is the underwriter merely playing with themselves to fool us? Who knows?

I ponied up for my entitlement.
Feel free to point and snigger if that turns out to be a bad call - I will deserve it.

This is not investment advice. Do your own research. I am prone to error.