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fdewaal
Contributor
Why is the share falling by 50%. With the n letters on issue what is a fair value per share?
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1 REPLY 1
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Well, for every share you own, you are now going to have to buy an extra 2.31 more, at 12.5c a share. That means that for every share you own, you will need to spend 29c more, to eliminate the effects of share dilution. So if it is going to cost you 29c a share in a couple of months time, why on earth would you want to buy at 40c a share now? A word of advise, IMO, this company already has 1bn shares in circulation, and now are introducing 2,4bn more. When stocks get this massively diluted, there is almost always a major shareholder that will protect his interest, i.e. that will prevent his holdings from becoming diluted. And, that shareholder will also have pumped additional money into the company, because companies that enter into capital raising exercises hardly ever get the capital from the market alone. So that shareholder will pump money in, at very favourable conditions for themselves, at the expense of the little guy - you. My advise, study the prospectus very carefully, check to see how the debts will be settled, and if you smell a rat, then sell your NPL's, so that you compensate for the dilution, but don't have to invest more money. I think it was Confusious who said never re-inforce failure?
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