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Thursday, January 27, 2011

Why ask shareholders to pour in more?

Why ask shareholders to pour in more?
07:20 PM Jan 26, 2011
Letter from Denis Distant

Barely five months after a rights issue at 10 cents, SPICE i2i Ltd is having another one at 5.5 cents.
The announcement mentions that the price is at a 52.2 per cent discount to the last traded price of 11.5 cents. It also indicates that the theoretical ex-rights price is likely to be 8.5 cents, but investors do not seem to agree as the cum-rights price has already dropped to 8 cents.
With interest rates at current lows, would it not have been better to take finance instead of asking minority shareholders to pour in more money, bearing in mind the loss they already carry on the "rights shares" taken up last August not to mention their earlier shareholdings?
Or why not use share placements like so many other companies ?
URL http://www.todayonline.com/Voices/EDC110126-0000561/Why-ask-shareholders-to-pour-in-more
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