AIR - Air NZ.

[Balance]

This doesn't effect the dilution though, if I'm reading it right. Still going to be three times as many shares outstanding once this has settled, it's just that you only get one rights share which entitles you 2 cheap shares, rather getting two rights shares which each entitle you to 1 cheap share.

Same outcome.

You are right of course about the dilution and outcome.

It is the first time in decades of investing that I have come across such a rights issue - as in one right for 2 shares!

Companies and underwriters structure capital raising to achieve certain outcomes :

1. The companies to get the capital they want and/or need at the cheapest cost and least dilution to existing shareholders,

2. Underwriters to get existing shareholders to take up the issue and simply collect their fees. If they end up with shares, they want the shares to be as cheap as possible so they can make a quick gain.

The way that this AIR capital raise is structured, it appears to be a compromise which implies to me that NZ government had a lot to say & influence about/over the CR.

[Beagle]

You get one right for each share and that gives you the right to buy two shares at twice the price they're really worth, simple

[winner69]

Those getting the new cheap shares from taking up the rights will be getting an even number of new shares ….that’s good

[stoploss]

Does that mean that you now have to cover 1.632 shares for say, the $1.26 share you shorted it on Friday?

Means at yesterday’s closing price of 90.5c, you now need to pay $1.47 (loss of 19c) to cover your short?

Air closed on Friday at $1.26 cum rights so at yeaterday’s closing price of 90.5c, the share is actually up 39.5c on my calculations - so CMC calculation is working in your favour.

yes I have more shares short now , but not as many as I thought I would be .... They have adjusted the price of the execution down . So before as I was short at much higher levels account was showing a profit. Currently a loss..... ( It's not a big deal , shorting is always risky ) I'm happy to sit it out , as until people actually get the offer we won't know how many of these are going to be taken up, how many people will sell existing stock to fund the rights purchase etc ....
Being long CNB.ax is a much easier game.

[Entrep]

You are right of course about the dilution and outcome.

It is the first time in decades of investing that I have come across such a rights issue - as in one right for 2 shares!

Companies and underwriters structure capital raising to achieve certain outcomes :

1. The companies to get the capital they want and/or need at the cheapest cost and least dilution to existing shareholders,

2. Underwriters to get existing shareholders to take up the issue and simply collect their fees. If they end up with shares, they want the shares to be as cheap as possible so they can make a quick gain.

The way that this AIR capital raise is structured, it appears to be a compromise which implies to me that NZ government had a lot to say & influence about/over the CR.

I recall the Sky raise was 3 cheapies for every 1 held, could be wrong

[BlackPeter]

You get one right for each share and that gives you the right to buy two shares at twice the price they're really worth, simple

classic ... this made me chuckle :

[Bjauck]

You get one right for each share and that gives you the right to buy two shares at twice the price they're really worth, simple

The government is getting the help a lot of private investors in bailing out Air NZ - a strategic NZ asset. I hope the private investors understand the risks. The government's investment is underwritten by all taxpayers, whereas private investors undertake it at their own risk.

Warren Buffet has had a mixed history with airline stocks too.
https://nz.news.yahoo.com/how-warren...134849843.html

[Balance]

Short covering in progress?

[Beagle]

This is like watching a circus or a bunch of teenagers playing musical chairs. Who's going to be left carrying the baby later this month ? Who cares they say, lets just party on and make heaps lol

[Arbroath]

This is like watching a circus or a bunch of teenagers playing musical chairs. Who's going to be left carrying the baby later this month ? Who cares they say, lets just party on and make heaps lol

I think 2 things are going on here simultaneously:

1. There is an extreme amount of ignorance from newbies about how a rights issue works not helped by the NZX stuff-ups. In particular what the record date actually means for how you can trade etc.

2. The professionals have been sidelined over the past 2 years as the company was overpriced the whole time. Those that remain will bid for extra stock at 53c and it will be interesting to see the final take-up once all the newbies are asked for $1.06 for every old share they owned.