Fisher & Paykel Appliances (FPA) have recently announced a capital raising involving both an issue of shares to a strategic partner (Haier) as well as a fully underwritten renounceable rights issue. When calculating the value of the right, it is important to note that there are three stages to the capital raising. First there will be a placement to Haier at 80 cents per share. This is followed by a 1-for-1 rights issue, with Haier’s placement shares also being eligible to participate in the rights offer. Finally there will be an additional ‘Top-up’ placement to Haier to bring their holding to 20% of outstanding shares. With the shares currently trading at 2.5 times the rights issue price, I assume there will be a strong take up of the rights offer, and for people not wanting to take the offer up there will be strong trading in the rights. Haier is a sub-underwriter for the rights offer, which given a strong uptake of the rights offer, this will be inconsequential to the calculations. Upon the completion of all three capital raising events, the number of shares outstanding will have increased from 290 million to 726 million. The following are my calculations of the capital raising:
|Shares||Share price||Equity Raised|
Similar to my Nuplex rights-issue calculator I have created a calculator to assist with calculating the value of the right and the ex-right share price. It works on the basis that the wealth of a share-holder doesn’t change on the record date (4th June 2009); the shares and the rights just begin trading separately. Please note that the default price is based on the closing FPA share-price on 27 May 2009.
Disclosure: I am not currently a share-holder or a previous share-holder of FPA.