Capital Market
ABC Transport Plc Plans to Raise N1.27 Billion Via Rights Issue
ABC Transport Plc, a Nigerian leading transport company, has proposed to raise an additional N1,127,236,000 via way of a rights issue, the company disclosed a statement filed with the Nigerian Exchange Limited.
ABC Transport through its Stockbroker, FSL Securities Limited, has submitted an application to the Nigerian Exchange Limited for approval and listing of One Billion, One Hundred and TwentySeven Million, Two Hundred and Thirty-Six Thousand (1,127,236,000) Ordinary Shares of Fifty Kobo (N0.50) each at Thirty-Five Kobo (N0.35) per share, on the basis of sixty-eight (68) new ordinary shares for every one hundred (100) ordinary shares held.
The qualification date for the rights issue was Tuesday, 30 November 2021.
What is Rights Issue
A Rights Issue or Rights Offer is a privilege given to existing shareholders of a company to buy additional shares in the company.
It is an invitation to existing shareholders to purchase additional new shares in the company. This type of issue gives existing shareholders securities called rights. With the rights, the shareholder can purchase new shares at a discount to the market price on a stated future date. The company is giving shareholders a chance to increase their exposure to the stock at a discount price.
Key Takways
- A rights issue is one way for a cash-strapped company to raise capital often to pay down debt.
- Shareholders can buy new shares at a discount for a certain period.
- With a rights issue, because more shares are issued to the market, the stock price is diluted and will likely go down.