Are We Being Miss-Sold Speedy PLC Rights Issues?
Are We Being Miss-Sold Speedy PLC Rights Issues?
Just been reading over the rights issue and I’m start to wonder if we are being moss sold the rights issue?
I know with the rights issue we were expecting a fall in the share price of Speedy PLC but doesn’t it say somewhere that if we take up the rights issue to buy 9 for 1 shares we currently own at 23p then we will be making around a 39% mark-up?
If this is right, we buy at 23pence * 1.39 (39%) = 0.3197 pence
So in order to make this 39% mark-up the shares will then have to be a value of 31p (or 32p rounded up).
When the new shares get issued how will this bump up the price, or even will it? – With the current share price around the 25p I wonder if we will see this mark-up of 39%.
Through basics demand and supply curves, whenever there’s an increase in supply such as the case in shares, won’t this push down the value of the shares anyway?
| S |
Below is the demand / supply of Speedy PLC Shares (This is just an illustrated example)
P is the current price and Q is the current quantity of shares.
If more issues are introduced using the rights issue then this will increase supply of shares from S to S2 bringing about more Quantity from Q to Q2 and lowering the price from P to P2.
So with more shares issued will this deflate the current share price as it is today?
