Share Purchase Plans

[Aaron]

From my unreliable memory banks, Aaron, I remember a flood of SPP's by Australian companies when that form of capital raising first became popular. I think that the usual drill was for announcements to be made simultaneously with entitlement to the issue, i.e. those already on the register qualified for the issue. It became popular to hold a small number of shares in companies that might make a SPP!

Edit. Since then, the usual practice has been to raise a big chunk from instos first, with shareholders often getting a smaller slice. Justified by the need for speed!

Yes it looks like a bad idea. SPP were a bit different to rights issues in that they asked for a $10, $20 or $50k chunk of cash. Snow Leopards example is a entitlement/rights issue done on a pro-rata basis although it is a good example as the entitlement offer is for 50cents a share whereas if I am not mistaken Kathmandu's share price is currently over a $1 but I guess the dilution impacts the share price(potentially more than doubling the number of shares on issue). The record date is this Friday so trades are +3days so effectively it is only open to current shareholders if I am correct. This would confirm that it was a bad idea and this thread should be deleted, unless companies desperate for cash start putting more and more generous offers out to get investor cash as time goes on.

Thanks for the replies, I will put more thought and effort into ideas before posting next time. I might even be able to dig up an old SPP from the aussie banks back in 2008/09 and look at what they did back then.