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Monday, 19 Oct 2009
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Renounceable Rights Issues

RENOUNCEABLE RIGHTS ISSUES 

STUPID QUESTION: What is the difference between non-renounceable and renounceable share offers? 

REPLY:  When a company offers shares to existing shareholders under an entitlement or rights structure (offering 3 for 5 at 120c for example) the offer can be renounceable or non-renounceable. In both cases the shareholder has a “Right” to buy shares which is worth something. If the market price is 150c and the entitlement is to buy shares at 120c then the “Right” is worth 30c. 

A renounceable offer means shareholders the “Right” (to buy more shares usually at a discount to the market price)

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