RE: Shorts?25 Apr 2019 09:24
.......I remain worried that we may face dilution or hard terms for the 600 m shortfall "
deepjoy.. I wouldn't worry about it too much, firstly they have already said in between the lines that it will be equity either direct issue or convertible etc. but honestly the impact will be minor (unless of course all the headless PIs panic)
a quick calculation goes something like this....
current shares in existence: 4,797,057,259 say SP is 25p at time of issue and they issue at a heavy discount say 20p
current value is 4797057259x25p = £1.2bln now issue $600m @ 20p gives an extra 156m shares (20p*1.3 exchange) so new share count is 7.1bln add the $600m (cos it now belongs to us sharesholders) to the £1.2bln to make £1.66bln divide by new share issue and get an estimated price of 23p post issue.
So 2p dilution if they give a 20% discount from 25p not too much to worry about, but the problem with this share is the PIs don't understand and will likely cause another unnecessary dip that will recover.
The longer term issue with the dilution is sharing the EPS/Divideneds later in life, but we can worry about that then