Contact Energy - CEN Chart

[winner69]

And the share price rises 11c! Interesting. A very unusual reaction to a cash issue from NZ investors. Perhaps it was less than expected and sharehodlers are rushing to pick up more of a good thing? Perhaps more impressive was a commitment to return cash to shareholders who don't take up their rights, via a tender for untaken up shares. I have never seen that done before either. An NZ company who thinks in terms of their shareholders best interests? Wow!

SNOOPY

We may be learning from Aussies who do this sort of deal quite a lot ..... I rememebr I got something like 6 cents a share when Orica did this few years ago

[KS]

And the share price rises 11c! Interesting. A very unusual reaction to a cash issue from NZ investors. Perhaps it was less than expected and sharehodlers are rushing to pick up more of a good thing? Perhaps more impressive was a commitment to return cash to shareholders who don't take up their rights, via a tender for untaken up shares. I have never seen that done before either. An NZ company who thinks in terms of their shareholders best interests? Wow!

SNOOPY

This was done by AIA in early 2010. They returned 17c per right not taken up or sold.
If you only get a few rights, the fee for selling them yourself cuts into your return.

[macduffy]

Yes, a good move. It looks like CEN are finally taking note of their fraught shareholder/public relations and have decided it was about time to give regard to their minority shareholders.

Theoretical rights price looks to be about 9c at present.

[macduffy]

No one's picked me up on my howler yesterday re the theoretical rights price.

It is of course 72c, based on a cum rights price of $5.85, an application price of $5.05 and an average cost of $5.77.

[percy]

[QUOTE=macduffy;344101]Yes, a good move. It looks like CEN are finally taking note of their fraught shareholder/public relations and have decided it was about time to give regard to their minority shareholders.

Yes was a good announcement.

[CJ]

No one's picked me up on my howler yesterday re the theoretical rights price.

It is of course 72c, based on a cum rights price of $5.85, an application price of $5.05 and an average cost of $5.77.

But you get 72c for each 9 shares you own so 8c per current share so we let you away with it.

Interesting to see the shareprice spike but then fall below openning. I think that is probably right - the announcement was expected so should have been fully priced in.

[macduffy]

You're too kind CJ, but thanks anyway!

Although the issue was expected, the ratio and discount to SP were unknown so it did leave a bit of room for market reaction. I didn't see an ex-issue date announced but it will be interesting to see how the SP moves meanwhile.

Correction: Record date is 9 May.

[CJ]

Although the issue was expected, the ratio and discount to SP were unknown so it did leave a bit of room for market reaction. I didn't see an ex-issue date announced but it will be interesting to see how the SP moves meanwhile.

Maybe my maths skills aren't upto date but I dont understand this.

On the basis they are pro-rata, why does the ratio and exercise price matter. Your existing shareholding will be diluted but by the exact amount that you receive under the issue.

The only negative is if they ask for so much money that you cant afford to participate.

What am I missing. How would it be different if it was a (say) 2/9 split with an exersize price of $2.525.

[macduffy]

Well, if the entitlement ratio was 2 for 9 and the exercise price was $2.525, the theoretical rights price, based on that cum issue price of $5.85, would be 61c, not 72c.

I was really referring to the effect that these factors have on the cum issue price ( and therefore the theoretical rights price) but accept that with the approximate size of the issue already flagged, there wasn't a lot of room for manoeuvre. Hence my "bit of room for market speculation".

[macduffy]

CEN rights had a good first day's trading, ending at 86c.