Member Info for tbow112

The problem is that simply applying or disapplying pre-emption rights is not precise enough. In the case of Pensana there may, or may not, be good reasons for the $100 million investment but the M&G subscription definitely looks very odd.

What appears to be needed is something like the Takeover Panel which looks at all secondary capital raising with a presumption that pre-emption should be the norm.

"dilution ............... the trick is to keep it to a minimum ....."

Mumbles, that is a quotation from your own posts. Please tell us where a discounted issue to M&G fits in.

Mumbles, you appear to be a bit confused about the stock market. In principle the primary market is for IPOs and the secondary market is where companies are expected to raise further capital. The distinction is pretty obvious if you look at the Companies Act.

One reason for the legislation is that issuing shares at a discount is a fairly simple way of cheating shareholders out of what are regarded as their rightful rewards.However, on occasion, raising capital from existing shareholders may be impractical or impossible so there is a provision in the Companies Act which permits shareholders to vote to disapply their pre-emption rights.

Unfortunately this provision has become more and more frequently misused by company managements to issue discounted shares to favoured shareholders – something which is obviously to the disadvantage of the remaining shareholders.

The whole business of discounted share issues that needs much tighter control, and the absence of that control does the reputation of the LSE no good at all.

In the case of Pensana it is very unlikely that shareholders who voted to forego their pre-emption rights thought they were voting for M&G to be issued discounted shares. Indeed I am surprised that M&G thought it appropriate to accept the shares.

Not pointless at all. It is something that should have been put a stop to a long time ago.

However I am surprised to see Pensana involved.

" dilution ............... the trick is to keep it to a minimum and for any diltion to be ringfenced to the project and not the whole company."

Mumbles, how do you make the recent M&G shenanigans consistent with your earlier opinion ?

"As I said earlier, at least when sophisticated investors inject cash, they are adding real value to a Company, unlike PI's who when they buy their shares 'on market ' actually does nothing to contribute to a Company's equity"

I suspect that most PIs on this board would be delighted to take up an open offer at a higher price than M&G have paid. The problem is that no open offer has been suggested.

"Direct investment, the former does nothing for Retail Investors, the Latter adds to our collective Equity, ie adds 'real' value to the Company.."

Rubbish. Issuing shares at a discount adds no value at unless there is a quid pro quo.

Note how there is a whole section of the Companies Act trying to control the issue of discounted shares. Those clauses are there for a good reason.

"why wouldn't they if they favour II investment moving forward"

Because it is cheating the remaining shareholders. The board are supposed to act on behalf of all shareholders.

There is no good reason for the bonus B-share issue.

Landsdowne etc signed up to CLNs with two obviously incompatible clauses. These clauses could readily be rationalised as long as a small quantity of CLNs were sold by them to an unconnected party.

In fact Landsdowne etc. appear to have done nothing to deal with the clauses and are apparently claiming that they should be compensated for their idleness.

this latest raise does look like someone taking the ****.

m&g may be a valued shareholder but that is no good reason to give them cheap shares without explanation.

"Or you can listen to the toilets negatively talking down Pensana for their own personal reasons."

Just to illustrate your complete lack of understanding, we are actually complaining that the deal undervalues Pensana.

Lets try it a different way.

You have a cake worth $400 million, and 300 million people each with a share. Each shareholder has a share worth $1.33.

95 million more shareholders add $100 million to the cake . Result is that the cake is now worth $500 million and there are 395 million shareholders.

Each shareholder now has a share which is only worth $1.27.

The shares are now worth less than before the deal.

Mumbles, please stop digging. 80p is a significant discount to 96p.

China, surely your post no.2 illustrates that post no.1 is close to nonsense. Equity value does not measure anything of relevance.

You also appear to have missed the fact that it is you who is undervaluing Pensana.

Mumbles, your unduly complex logic seems to have missed the fact that if you have a company worth $400 million and you put $100 million into that company, you would then expect the company to be worth $500 million.

Or, to be more accurate, it is proposed that the investment be made at below 80p.

25% of the company for $100 million is a bad deal and shareholders should vote against it - unless te company comes up with a good and so far unmentioned reason to accept it.

So , as you say, the investment was made at below 80p - a significant and very inappropriate discount.

"This investment was done at the market price ......"

Mumbles, please try to get your facts straight. This investment was not done at market price.

If you issue shares they are shares in the whole company - mine included. If you have a good project, issuing shares is something to be avoided.