There’s some misinformation and misunderstanding among today’s posts around this rights issue.....particularly the dilutive effect.
Shareholders are entitled to buy 1 share @ $4.56 for every 5.15 shares they hold.So if you hold 515 shares @ $5.39 (trading halt price) that’s 515 x $5.39 = $2776 and you pick up your 100 share entitlement @$4.56 you’ve now got 615 shares - total value $3232 ....Divide by 615 = $5.26 per share.
That’s the dilutive effect in mathematical terms if you do nothing ....if you pick up your entitlement you’re notionally square HOWEVER ......
how the market reacts is a whole other matter .... but to say it will open Friday around $4.56 demonstrates a lack of understanding about how this all works.
I’ve been a hold recently on this stock thinking I would only top up if it got down into the mid to low 4’s. I’ll therefore probably pick up my entitlement because (a) I don’t like the dilutive effect of not picking it up and (b) because I think, long term, this stock will recover and $4.56 is a pretty good top up price.
SYD Price at posting:
$5.39 Sentiment: Hold Disclosure: Held
