From: Terry Harper 
Newsgroups: uk.finance
Subject: Re: New Share issue - effect on current price
Date: Thu, 04 May 2006 20:38:16 +0100

On Wed, 03 May 2006 23:09:11 +0100, Richard Buttrey
 wrote:

>I have shares in a company which today closed at 59.5p (down 2.5p on
>the day).
>
>A news item on iii says that  it is proposing to raise 25 mln stg
>before expenses through a placing of 46.73 mln shares at 53.5 pence
>each, to allow it to continue its rapid expansion.
>
>If this is approved does that imply there will be two classes of
>shares, or if not what is the possible impact on the current price. On
>the face of it, and assuming they stay at today's price, I would
>presumably be better selling now and buying back in at 53.5 pence.
>
>Leaving aside dealing costs, am I missing something????

What usually happens is that a placing below the current price leads
to a temporary fall in the price about the time of issue, and the
institutions who underwrote the issue, or took it up, try to make
money by off-loading the shares above the placing price. 

Once this overhang has been cleared, normal business resumes, or not,
as the case may be. Don't forget that you will incur costs by selling
and buying back, and you may not be able to buy back at the lower
price.
-- 
Terry Harper
URL: http://www.btinternet.com/~terry.harper/