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Online Share Trading

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DSY Rights issue

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Brainware
Frequent Contributor
Sens came out yesterday: The Rights Issue will consist of an offer of 55,555,556 new Discovery shares in the ratio of 9.38641 new Discovery shares for every 100 Discovery shares held on the record date of the Rights Issue, being Friday, 20 March 2015, at an issue price of R90.00 per Discovery share What would this be in "plain" English? Would it be a good deal to buy DSY at the moment ? Can we expect DSY share price to go down ?
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37 REPLIES 37
fressa
Regular Contributor
Buy. If u buying at R90 you are realizing an immediate profit. How do you participate in the right issue? I can't seem to find the icon
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SimonPB
Valued Contributor
to get the right to buy at R90 you need to be holding DSY at close on friday .. for every 100 shares you hold you get the right to by 9.38 DSY at R90
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Brainware
Frequent Contributor
Thanks Simon and Fressa When I looked at SHF and WHL the share price came down with the rights offer How will it affect the DSY share price?
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SimonPB
Valued Contributor
the theoretical dsy price on monday should be around 900c lower
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Brainware
Frequent Contributor
Am I missing something? Why would it makes sense to buy for eg 1000 DSY shares at R127 ea now (just for simple maths) That equals R127000 (plus costs) Then you qualify for 93.86 DSY shares (ie 9.386 shares for every 100 DSY shares you own)to be bought at R90 = R8447 (?? about costs here) So you will have 1093 DSY shares costing you : R127 00 plus R8447 = R135 447 That is R123.92 a share (Roughly speaking without the costs etc) If we think, the share price may dip to R90 on Monday, why would I want to buy it to-day?
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SimonPB
Valued Contributor
no costs on the R90 shares you buy .. dsy is not dropping to R90 on Monday .. I expect the drop to be less than the formula says it should be
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Brainware
Frequent Contributor
You right Simon, we dont know how far it will drop Though the chances for a drop , is quite good If it only drops to R123 (my calculation did not include costs) - how does it make sense to buy it today? Am I missing something here?
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SimonPB
Valued Contributor
I bought yesterday and will buy more before Fridays close
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Brainware
Frequent Contributor
You are a cleva guy, Simon I am still learning this stuff So what am I missing from a financial perspective?
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Not applicable
don't forget that you will be given an NPL which should be worth the difference in the rights issue price and the current traded price. NPL's are tradable, so you can cash in and not have to buy more (which would a bit daft, IMO - better to take the issue and buy more - helluva deal DSY are offering you)
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Copper
Regular Contributor
how and when do we get the opportunity to buy the shares at R90
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Brainware
Frequent Contributor
Skaaptop thanks for the info I have not done this before So, how would the calculations work? Im blonde he he
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SimonPB
Valued Contributor
you receive 9.38* rights to buy at R90 per 100 shares held at close on Friday
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prancing_horse
Super Contributor
If one does not hold any DSY and wants to get in now at current prices and take up your rights you will end up with an approx. cost of 126 per share. Does that mean the NPL will trade as much as 36?. I doubt it.
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Rams
Super Contributor
Using your calculations above , are you really wanting to know if you can make a quick buck out of this..average buy in at 123 and trading at 126 on Monday?
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SimonPB
Valued Contributor
of course it will npl = stock - take up price
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Cilliboy
Occasional Contributor
I am holding 600 shares at the moment, I will be able to buy 6 X 9.38 X 90 ?
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SimonPB
Valued Contributor
yip, or sell the rights at dsy price less 90
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Vince888
Regular Contributor
Hi brainware. I do not agree your calculation that the your cost per share will be roughly R123.92. It will actually be much higher as you have to use the wac (weighted average cost) method to get an accurate cost per share.
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