Woolworth rights

That was quick. Woolworths using their good results from yesterday, the fact that they were favourably received by the market in order to hit the rights issue quickly. They are looking to raise 10 billion Rand through a fully underwritten renounceable rights offer, a billion Rand more than the Equity Bridge Facility (excluding the costs associated with that facility). The current market capitalisation was 66.9 billion Rand last evening. That is at the current price around 14.94 percent of the company, obviously there will have to be a discount offered to shareholders, let us presume around 7 percent (73.52), which means around 16 per 100 shares, or roughly 15 percent of your current value of Woolworths.

Obviously I am making a calculated guess, we will just have to wait until the 2nd of September to have a better idea of exactly what you are in for, all these numbers will be set in stone on Tuesday, the price between now and then is going to be carefully watched by all and sundry. The timing is all rather quick, fast-forward a month and the company will have their money from the shareholders who will have the shares in their accounts by the 2nd of October.

What are the implications if you do not follow your rights? Well obviously they expire worthless, that is a bad outcome, we will send a more detailed email to our clients who are Woolworths shareholders when we see the details next week Tuesday. The reaction from the market, in other words the current share price is pretty muted, the stock is down a smidgen. This is what you call telegraphed to shareholders (not via the bush telegraph) and the market price being as close to the news as possible.