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When stock issues of rights ?
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knightrider
Elite |
23-Nov-2006 10:33
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No, I think it is different from the warrant. The rights' price is the actual price agreed by the company stock who issue it and it usually only 1 months time-frame. You just need to subscribe it and it will automatic convert to parent share after the ex-rths date, thus your volume of the stock will increase by the amount you subscribe. Correct me if I am wrong. To add, for public who purchase the rights from those who entitled but they do not want to exercise or subscribe, usually it's trading price is a fraction of the actual right's price. Continue from Example below , the right is issue at S$0.10c but when the listing of the rights at the SGX is only S$0.005c. Thus those who bought the rights on the open market, still need to exercise at S$0.1c as stated by the parent stock who issue. |
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terencefok
Master |
23-Nov-2006 10:13
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Is the rights entitlement something like warrants where the price of the rights is the stock minus the exercice price? |
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knightrider
Elite |
23-Nov-2006 09:30
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Hi, I need some advice and comments when a Company issues rights, what is the purpose ? I am not sure, correct me if I am wrong! When they starts to issue rights, does it mean they need cash for expansion or whatever reason. Thus, this show they need cash, instead of loan from bank (need to pay interest), they get cash from investor and this counter's share will also be diluted as more share is floated in the market. Example : The current share is now trading at S$0.30 (thus I buy 5 lots and pay 5000 X 0.3 = S$1500), then they announce every 5 lots give 1 lots rights ( need to subscribed at S$0.10 per rights issue). Thus, shareholder who want the 1 lots must go to ATM to transfer money to buy the rights and thus pay S$100 in total for the 1 lot rights. When the ex-rths is over, is it means the shareinvestor now have 6 lots of total stock with the total investment of S$1600, and my average per share is S$1600 / 6000 = S$0.267c. And I assumed after the ex-rths, the market price adjustment will be adjust to around S$0.25 or S$0.27 etc. Thus, everytime after the issues of rights and after diluted the share, and after ex-rths date, they price will falls !!! Then again, if I find that this is a lousy counter, even it gives off rights for subscription, I can turn them down by selling away the rights entitlement to the market (other investor who is interested) before the expired or ex-rths date ! Please comment and correct me ! |
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