Originally Posted by
mistaTea
Not sure how their advisors came up with the 1:2.83. However, as I mention in a previous post it is a clever way of making it look like a heavily discounted rights offer when in fact it is not. 1:2.83 @ 12 cents is exactly the same as if they did a 1:1 @ 34c (near enough to the last closing SP).
So it hopefully attracts a lot of interest given the 'huge discount' while in reality it allows them to raise as much capital as possible given the low SP.
Those who participate are going to do just fine - it is only those who don't or can't that will be diluted to oblivion. The ones that can't participate will create even more opportunity for those who can (given you can bid for 1: 2.83 + 20%)
If the rights offer is fully subscribed (and I expect it will be) then there will be more like 1.67B shares outstanding.
Who knows what the SP will do. In theory it would open at 17c I suppose (previous market cap + $157M cash injection). But if the analysts etc are broadly optimistic that Sky is much better placed now with lower debt and a clearer plan moving forward (i.e. the entry into broadband), then it is not crazy to think there will be more optimism which would lift the SP. By how much? Who knows. A new Sky that has multiple revenue streams (content aggregation, broadband and mobile) as well as an international rugby offering (once international rugby resumes) will clearly be worth a lot more over time than the current one-trick pony.
Remember that time Obama roasted Trump? And it ended up being the final catalyst for him to run for POTUS? I have wondered if Spark releasing Spark Sport, and then Moutter rubbing Sky's nose in it over the RWC would be an equivalent moment. Spark have not commented yet, but I imagine the notion of Sky fighting fire with fire, with already 1M customers to market to will make them squirm a bit now. The hunter becomes the hunted?
How will I approach it? I am going to try and get my hands on as many shares as I can purchase (my entire allotment + 20%). I do genuinely feel for those who can't participate - but the horse has bolted now. I will take my full entitlement plus some shares from those who can't participate.
At the end of the day, I am a capitalist.