There is appetite for the shares in excess of the issue price, despite being repeatedly sold down. There is 1.95% short recorded, with Blackrock upping theirs slightly on Tuesday. Short selling during an offer period obviously makes the issue price seem less attractive. CD and R have the only 25p shares. As cornerstone investors, I see no reason why they would sell these, or why anyone involved in the capital raise would sell shares at below 30p. I think that puts a floor at 30p ( as we have seen on recent trading with knowledge of dilution ) and if and when the fundraise is completed any immediate concerns relating to Sigs ability to continue trading with a new board and plan will disappear. We shall then be left with investor sentiment pending company updates, which I think is currently showing positive against those trying to sell it down.
I think we may be now at a stage where Blackbird's profile is such that any significant price weakness will be bought into. And as previously posted, in view of past performance can expect newsflow from direct sales, together with inroads on the sought after OEM deals facilitated through Mr. Honeycutt.
There's not much doubt CD and R are aiming for 25% holding. But, in the event the offer is not fully subscribed - The only 25p shares are CD and R's - and how many pence cheaper do you say the underwriters will be paying for the unclaimed 30p shares, not taken up by CD and R? Or will sell them for off-market? And who are these predators?
For reference, the dilution aspect is actually stated in the RNS. 'Following the issue of the New Ordinary Shares to be allotted pursuant to the Capital Raise, a Qualifying Shareholder that takes up its Open Offer Entitlements in full will be diluted by 37.4% as a result of the CD&R Investment and the Firm Placing. A Shareholder that does not take up any Open Offer Shares under the Open Offer (or that is a Shareholder in the United States or an Excluded Territory that is not eligible to participate in the Open Offer) will experience a dilution of 49.9% as a result of the Capital Raise.'
Imagination running away with you. And a buyout in the next year by CD and R ( 25% holder ) at any discount at all to the 30p it is envisioned they will pay for shares under the 2nd tranche? Think again.
Today's Hunnicutt options RNS ( to be expected ) gives us a sense of where we are with those generally. Following the above grant there are a total of 12,005,000 share options granted over unissued Ordinary Shares granted to Directors and PDMRs representing 3.57% of the Company's current Ordinary Share capital of 336,114,092 Ordinary Shares.
"On completion of the Capital Raise, CD&R is expected to hold approximately 25% of SIG's Enlarged Share Capital" So for me, that is 25% of the shares put beyond trading, and that figure excludes shares taken up by other 'firm' holders. I shall take up mine, apart from in the most unlikely as I see it event I can buy at less before.
Plus a lot under the 2nd. Tranche which includes us - "CD&R has agreed to invest £20 million pursuant to the Firm Placing as well as up to £14 million pursuant to the Placing and Open Offer (subject to clawback by existing shareholders under the Open Offer) at the Issue Price." So if you take the view the cornerstone investor will not be selling, the less other investors including pi's take up - allowing CD and R to take up more - the better off we shall be.
Johnson said share prices implied a fall of 10% or more for house prices which was overdone given factors underpinning valuations including government support.
"We believe with banks' willingness to lend on Help to Buy, strong buy vs rent economics, the greater priority of homes post lock-down, and decades of under-supply will continue to provide a resilient demand profile," she wrote in a note to clients.
"Demand will be strongest from first-time buyers and for cheaper homes, favouring Persimmon, and for affordable homes, perhaps boosted by the next budget, favouring Countryside, she said.
Persimmon and Berkeley's ability to pay dividends is undervalued but Redrow and Bellway provide a better value opportunity in the sector as worries about stretched balance sheets recede, Johnson said."