Exercising rights offerings / options

[GuessX]

Hi all.
FAirly new to this game, so hoping someone can help with some terms.. I've searched google first off, but it didn't help me all that much, having someone to bounce questions off is a nicer place to be.
I've got a small amount of cash in a company called Novogen (listed on the asx as NRT.ax and NASDAQ as NVGN).
They've treated me well, I was in at an average of 18c per share, and sold my initial investment at 42c .. keeping hold of 2/3 of my shares. So I'm in the ride with virtually no risk ..
Last night they had a trading halt, and listed a notice that diluted shares from mid 40c to 30c. They were short on funds to take their cancer drugs to trial, so needed to raise some capital. This bit I understand somewhat.
What followed was a notice to all exisiting shareholders advising of 2 sets of options. A 6 month option of 30c per share, and a 5 year option of 40c per share.
The notice can be found here :
http://hotcopper.com.au/threads/ann-.../#.VTamdCGeDGc[1]
I get the feeling that I should be purchasing some more shares now and then additional shares are offered to me later at this same price - I really think this company will continue to rise in the mid term, but not sure how I am supposed to take advantage ..
Can anyone ensure I'm thinking along the right track?

I'm using ASB securities if this helps -
Cheers.

[macduffy]

I know nothing about the company or the merits of the issue but from a quick reading of the first para or so of the announcement it apears that rights to the issue will be determined on holdings as at 1 May. If it follows the usual course, the company will send out documentation - entitlement papers - to eligible shareholders after that date. Companies on ASX usually treat NZ shareholders as eligible for rights issues.
Cheers

PS. If the shareprice drops in the meantime it usually indicates that there are some shareholders who don't want to increase their exposure to the company and are selling in anticipation of selling pressure from like-minded shareholders!

[GuessX]

I know nothing about the company or the merits of the issue but from a quick reading of the first para or so of the announcement it apears that rights to the issue will be determined on holdings as at 1 May. If it follows the usual course, the company will send out documentation - entitlement papers - to eligible shareholders after that date. Companies on ASX usually treat NZ shareholders as eligible for rights issues.
Cheers

PS. If the shareprice drops in the meantime it usually indicates that there are some shareholders who don't want to increase their exposure to the company and are selling in anticipation of selling pressure from like-minded shareholders!

So my current shares are eligible to options? Or do I need to purchase more and these additional shares are eligible?

IE if I pick up 10k shares at 30c, I can pick up to another 10k at 30c in 6 months time?

[macduffy]

So my current shares are eligible to options? Or do I need to purchase more and these additional shares are eligible?

IE if I pick up 10k shares at 30c, I can pick up to another 10k at 30c in 6 months time?

Yes, your current holding would appear to be eligible for the proposed options issues. Further purchases before the entitlement date would also qualify. The issue is for rights to 1 new share for every 6 shares held plus an option for 1 further share, either in 6 months time or within 6 months. The issue documentation will/should clarify that point and other matters. A further option for 1 new share for every 2 taken up in the rights issue is also proposed in/within 5 years. Exercising the rights to each issue would not normally commit to doing likewise for the other issue but documentation will clarify, I imagine. An important point to note is that oversubscriptions may be accepted, ie if not enough shares are subscribed for in the issue. This is sometimes an indication that management anticipate a shortfall in the issue, for whatever reason - price, market conditions, market perception etc.

Note also, that the issue of options is subject to approval by shareholders at a general meeting to be held in June.


PS. The price for the rights issue doesn't appear to be set yet. Probably dependent on what price the participants in the USA placement agree to.

Further edit: Disregard that last bit. Price of the new shares is clearly expected to be 30c!!

[GuessX]

Yes, your current holding would appear to be eligible for the proposed options issues. Further purchases before the entitlement date would also qualify. The issue is for rights to 1 new share for every 6 shares held plus an option for 1 further share, either in 6 months time or within 6 months. The issue documentation will/should clarify that point and other matters. A further option for 1 new share for every 2 taken up in the rights issue is also proposed in/within 5 years. Exercising the rights to each issue would not normally commit to doing likewise for the other issue but documentation will clarify, I imagine. An important point to note is that oversubscriptions may be accepted, ie if not enough shares are subscribed for in the issue. This is sometimes an indication that management anticipate a shortfall in the issue, for whatever reason - price, market conditions, market perception etc.

Note also, that the issue of options is subject to approval by shareholders at a general meeting to be held in June.


PS. The price for the rights issue doesn't appear to be set yet. Probably dependent on what price the participants in the USA placement agree to.

Further edit: Disregard that last bit. Price of the new shares is clearly expected to be 30c!!

Thanks mate.

Everything was laid out nice and clear in the prospectus .. perhaps I shoulda just waited, haha