Right of first refusal, or as I like to call it, freebie shares. Is this the beginning of a new trend where companies are going to be spinning off subsidiary/associate co’s and offering shares of the new IPO to existing shareholders of the existing listed co?
The first one we saw post-lockdown was BWG (Better World Green) with the IPO of ETC (Earthtec) where they offered to existing shareholders:
“At the ratio of 40 shares of the Company to 1 newly issued share of ETC. The fraction of newly issued shares of ETC resulted from the computation will be discarded”
The BWG shareholders right to shares in ETC was announced on 20 June 2020
The book closing date was 13 July 2020
Subscription date was 4-6th August 2020
What was the impact on the share price? It was as high as +50% during the period.
For SCC, at the end of Friday’s (28/08/20) close they announced the following:
“the allocation of up to 169,132,500 newly issued ordinary shares to the shareholders of the Company eligible for the shares allocation in proportion to their shareholding (Pre- emptive Rights), i. e. the shareholders whose names appear in the shareholders’ registration book of the Company as of the Record Date specified by the Board of Directors of the Company, whereas the Board of Directors of the Company has determined that 11 September 2020 be the Record Date (the “Shareholders Eligible for the Shares Allocation”), in a ratio of 7.0950 ordinary shares of the Company to 1 newly issued ordinary share of SCGP (In the case that there are fractions of shares arising from allocation of the newly issued ordinary shares to Shareholders Eligible for the Shares Allocation, the fractions shall be rounded down)”
Today the share price was the only large cap up ~+3% (market ~-1%). Am I saying that SCC is going to be +20% – + 50% by the time SCGP is listed? No. But I wouldn’t be surprised to see the share price move positively (it only has to be +1% for me to be right….) as long as the petrochem prices and the market doesn’t tank in the next 2 weeks.
Which company could do this next? I wouldn’t be surprised to see VGI try it with Kerry…but given they aren’t the majority/controlling shareholder it is unlikely. Fun times.
We use cookies on our website to give you the most relevant experience by remembering your preferences and repeat visits. By clicking “Accept”, you consent to the use of ALL the cookies.
This website uses cookies to improve your experience while you navigate through the website. Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may affect your browsing experience.
Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information.
Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. It is mandatory to procure user consent prior to running these cookies on your website.