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FINANCIAL CHRONICLE™ » CORPORATE CHRONICLE™ » Mara rights

Mara rights

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1Mara rights Empty Mara rights Mon Mar 07, 2011 9:11 pm

dinushaf


Stock Trader
What will be happened mara rights tomorrow? expert pls advice

2Mara rights Empty Re: Mara rights Mon Mar 07, 2011 9:17 pm

xmart

xmart
Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
people who bought at 15 will suicide themselves. not only for MARA, every rights are MARAI. i'm wondering who bought at those prices. fair value is 3.50-4.00!

3Mara rights Empty Re: Mara rights Mon Mar 07, 2011 9:24 pm

dinushaf


Stock Trader
but it;s nominal value is 10

4Mara rights Empty Re: Mara rights Mon Mar 07, 2011 9:28 pm

Fresher


Moderator
Moderator
@dinushaf wrote:but it;s nominal value is 10

that's crap
don't tell me you were one of those who bought

it's the same thing with every rights issue these days. ppl buy not knowing what that letter behind the "." is

5Mara rights Empty Re: Mara rights Mon Mar 07, 2011 9:29 pm

xmart

xmart
Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
@dinushaf wrote:but it;s nominal value is 10

yes, you have to pay more 10 Rs for each right. think one who bought MARA.R @15, have to pay another 10 Rs for convert his R to N. then it cost around 25 Rs. while N is available at 12.50.

6Mara rights Empty Re: Mara rights Mon Mar 07, 2011 9:46 pm

Monster

Monster
Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
npp wrote:
@dinushaf wrote:but it;s nominal value is 10

that's crap
don't tell me you were one of those who bought

it's the same thing with every rights issue these days. ppl buy not knowing what that letter behind the "." is
Newbies should know what is right issue before they buy. Those who bought right issue has to pay another 10/- to subcribe the rights. 15 + 10 = 25/-. Twisted Evil

7Mara rights Empty Re: Mara rights Mon Mar 07, 2011 9:53 pm

abra12


Manager - Equity Analytics
Manager - Equity Analytics
@dinushaf wrote:but it;s nominal value is 10

I hope some experts would post Clear Guidelines with examples on Critical issues like Rights Warrants etc to educate New members in this forum.That will help them to act wisely with the next right issue.(I can remember some replies of "ADVISOR" in investnow.lk)

8Mara rights Empty Re: Mara rights Mon Mar 07, 2011 11:34 pm

Meta Trader

Meta Trader
Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
@dinushaf wrote:but it;s nominal value is 10

oh boy......
my deepest sympathy !
by now i hope u have learned a unforgettable lesson !
every one make mistakes . but this is pure amateurish !

9Mara rights Empty Rights Issue Tue Mar 08, 2011 1:08 am

advisor


Senior Equity Analytic
Senior Equity Analytic
Thanks @ABRA12

I post here again what ever I post about Rights Issue

A rights issue is a way in which a company can sell new shares in order to raise capital. Shares are offered to existing shareholders in proportion to their current shareholding, respecting their pre-emption rights. The price at which the shares are offered is usually at a discount to the current share price, which gives investors an incentive to buy the new shares — if they do not, the value of their holding is diluted.

A rights issue by a highly geared company intended to strengthen its balance sheet is often a bad sign. Profits are already low (or negative) and future profits are diluted. Unless the underlying business is improved, changing its capital structure achieves little.

A rights issue to fund expansion can usually be regarded somewhat more optimistically, although, as with acquisitions, shareholders should be suspicious because management may be empire-building at their expense (the usual agency problem with expansion).

The rights are normally a tradeable security themselves (a type of short dated warrant). This allows shareholders who do not wish to purchase new shares to sell the rights to someone who does. Whoever holds a right can choose to buy a new share (exercise the right) by a certain date at a set price.

Some shareholders may choose to buy all the rights they are offered in the rights issue. This maintains their proportionate ownership in the expanded company, so that an x% stake before the rights issue remains an x% stake after it. Others may choose to sell their rights, diluting their stake and reducing the value of their holding.

If rights are not taken up the company may (and in practice, in many markets, does) sell them on behalf of the rights holder.

Because the rights are usually worth enough to cover the price differnce between the market price of the shares and the exercise price of the rights (because of the law of one price), shareholders do not lose if the rights are issued at a steep discount. It is therefore usual for the discount to be large (especially of the share price is volatile) to ensure that the rights are exercised.

It is possible to sell some rights and exercise the remainder. One possibility is selling enough rights to cover the cost of exercising those that are not sold. This allows a shareholder to maintain the value of a holding without further expense (apart from dealing costs). This does not mean that a shareholder can entirely neutralise the effect of a rights issue, only the element described by the formula below.

As with a scrip issue, the price before the rights are issued needs to be adjusted for the rights issue. The calculation is a little more complicated as the new shares are paid for. Before comparison with share prices after the rights issue, prices before the shares went ex-rights need to be multiplied by:

((m ×y) + (n ×x) ) ÷(m ×(x + y))
where x is the number of new shares issued for every y existing shares
m is the closing price on the last day the shares traded cum-rights and
n is the price of the new shares

The same adjustment needs to be made to per share numbers such as EPS if they are to remain comparable, for example, when looking looking at growth trends. However, a large rights issue is often associated with other changes that will distort these numbers or change trends such as paying off debt, expansion, etc.

This calculation makes the assumption that all rights will be exercised. This is usually an acceptable assumption as it is usual for a rights issue to be priced at a steep discount to the share price to ensure that the rights will be exercised.

In the interval between the shares going ex-rights and the rights being exercised, if the share price falls low enough for the rights to have significant option value, then an adjustment may have to be made for this. This happens very rarely.

Thanks .

10Mara rights Empty Re: Mara rights Tue Mar 08, 2011 3:33 am

UKboy

UKboy
Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
@dinushaf wrote:What will be happened mara rights tomorrow? expert pls advice

All I can do is pray for the people who have these rights.
Cannt imagine anything else I'm affraid

11Mara rights Empty Re: Mara rights Tue Mar 08, 2011 7:13 am

million


Senior Equity Analytic
Senior Equity Analytic
The quick buck strategy does'nt work most of the time.

i think After the WAPO rights hype the new comers were expecting the same with MARA too at least for some extent.

12Mara rights Empty Re: Mara rights Tue Mar 08, 2011 5:57 pm

abra12


Manager - Equity Analytics
Manager - Equity Analytics
thanks advisor,

I knew most of us used to learn the basics from Your posts as new comers to the CSE.

This kind of documents will be useful for any Serious investor to study the market and make investments.
But No Guidelines will be required for Casino type Trading..

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