ChatGPT answer8 Mar 2023 14:53
To calculate the theoretical ex-rights price (TERP) after a 1 for 19 rights issue, we need to use the following formula:
TERP = (Current market value of the shares x number of existing shares) + (Rights issue price x number of new shares issued) / (Total number of existing shares + Number of new shares issued)
Let's assume that the current market price of Amigo PLC's shares is £1.50 and there are 1,000,000 existing shares.
For a 1 for 19 rights issue, every shareholder is entitled to buy 1 new share for every 19 existing shares they hold at a discounted price. Let's assume that the rights issue price is £1.00 per share and 5,263,158 new shares are issued.
Using the formula above, we can calculate the TERP as follows:
TERP = (£1.50 x 1,000,000) + (£1.00 x 5,263,158) / (1,000,000 + 5,263,158)
TERP = £1,500,000 + £5,263,158 / 6,263,158
TERP = £1.21 per share
Therefore, the theoretical ex-rights price after the 1 for 19 rights issue will be £1.21 per share. This represents a dilution of approximately 19.3% from the current market price of £1.50 per share.