BSL - Bluescope Steel

[oldblue]

Interesting that BSL decided to underwrite the retail offer too. QUOTE.

Underwriting of these issues is pretty much standard practice these days.
No-one wants to risk an under-subscribed issue in a volatile market.

 

[Gamblor]

Thanks

Also re: Gamblor, no the price shouldn't halve, the back-of-envelope estimate is more like

(Price before announcement + price at offer) /2 = (2.57+1.55)/2 = ~2

So for us holders we're being blackmailed into doubling down

Oh ok - That makes todays trade seem slightly more reasonable - still to high for me to jump in though.

 

[stoxclimber]

Interesting that BSL decided to underwrite the retail offer too. QUOTE.

Underwriting of these issues is pretty much standard practice these days.
No-one wants to risk an under-subscribed issue in a volatile market.

It's pretty unusual to underwrite the retail component of the offer - my guess is a couple of the instos were willing to subunderwrite the retail component and BSL wanted all the $.

 

[MACCA350]

Thanks
So for us holders we're being blackmailed into doubling down

I'm not happy about that at all I had no intention of putting any more into BSL

cheers

 

[Taltan]

Am I missing something here. On Monday the shares opened at 2.39. On Tuesday they announce a dilution whereby any shareholder can double their shares on a one for one basis at 1.55 (or just do nothing and get diluted by almost half) and now ex-date the stock is trading at 2.42.

My understanding of the SPP is that lets say you own 100 shares you will have the opportunity to buy another 100 at 1.55. If you have 500,000 you can buy another 500,000 at 1.55 etc etc. Now either I don't understand the SPP or BSL has had a great week

 

[bonkerrs]

Please help me confirm my understanding.

I bought 2,000 shares @ 2.70 (11.04.2009) = cost $5,400
Then another 2,000 shares @ 2.60 (15.04.2009) = cost $5,200
Total = $10,600.00

If I don't participate and take the offer my shares will be worth 4,000 @ $1.55 straight away and if I take it up I can have 8,000 @ $1.55 (paying for another 4,000 @ 1.55).

Is that it?

 

[oldblue]

Please help me confirm my understanding.

I bought 2,000 shares @ 2.70 (11.04.2009) = cost $5,400
Then another 2,000 shares @ 2.60 (15.04.2009) = cost $5,200
Total = $10,600.00

If I don't participate and take the offer my shares will be worth 4,000 @ $1.55 straight away and if I take it up I can have 8,000 @ $1.55 (paying for another 4,000 @ 1.55).
Is that it?

You have 4,000 shares at a cost of $10,600.

You get an entitlement to 4,000 at $1-55 = $6,200.

You will then have 8,000 at a total cost to you of $16,800.

= an average cost of $2-10.

If you don't participate you'll have your original 4,000 shares at an average cost of $2-65 and your entitlement to the 4,000 @ $1-55 will lapse and be gratefully received by the underwriters.

If I were you and I could afford it I'd be taking up the 4,000 @ $1-55!

 

[johannlo]

What the heck is going on? So much for the 2 dollar target price... $2.45 at close.

Now pls aussie post give me my SPP forms

 

[oldblue]

Am I missing something here. On Monday the shares opened at 2.39. On Tuesday they announce a dilution whereby any shareholder can double their shares on a one for one basis at 1.55 (or just do nothing and get diluted by almost half) and now ex-date the stock is trading at 2.42.

My understanding of the SPP is that lets say you own 100 shares you will have the opportunity to buy another 100 at 1.55. If you have 500,000 you can buy another 500,000 at 1.55 etc etc. Now either I don't understand the SPP or BSL has had a great week

Well, it's not a SPP but a pro rata entitlement issue but other than that you understand perfectly!

Mr Market has decided, at least for the moment, that BSL is a steal at $1-55 and has bid up the price accordingly.
Financing is assured ( underwritten) and the market breathes a sigh of relief.
See post #211 in this thread.

 

[bonkerrs]

You have 4,000 shares at a cost of $10,600.

You get an entitlement to 4,000 at $1-55 = $6,200.

You will then have 8,000 at a total cost to you of $16,800.

= an average cost of $2-10.

If you don't participate you'll have your original 4,000 shares at an average cost of $2-65 and your entitlement to the 4,000 @ $1-55 will lapse and be gratefully received by the underwriters.

If I were you and I could afford it I'd be taking up the 4,000 @ $1-55!

Sorry, I don't completely get it - I have the right to buy 4,000 @1.55 and it will then be worth whatever the BSL market price will be?!!

 

[alphaman]

Sorry, I don't completely get it - I have the right to buy 4,000 @1.55 and it will then be worth whatever the BSL market price will be?!!

That's correct. After you get the new shares BSL's price can be anywhere between 0 to infinity.

But you can always sell the 4000 shares you already own to lock in a profit now.

 

[johannlo]

Unless there is a huge amount of profit taking your new shares will likely not be below 1.55 when your options become effective.

The next few days will sure be interesting

 

[bonkerrs]

It's appears to be a statutory requirement related to restrictions on companies dealing in their own shares.
As you can see from the miniscule number of shares involved, it is extremely unlikely to have any effect on the SP!

Ta oldblue and ta for the BSL answer too!! : too short?

That's correct. After you get the new shares BSL's price can be anywhere between 0 to infinity.

But you can always sell the 4000 shares you already own to lock in a profit now.

Has it been confirmed that you can do this and still receive the offer? I'm in to buy more BSL at 1.55

Unless there is a huge amount of profit taking your new shares will likely not be below 1.55 when your options become effective.

The next few days will sure be interesting

Historically - What kind of reactions usually happen with these situations?

 

[my03]

Hey guys, quick question, ive been keeping my eye on bsl so does ths represent good value for someone getting in now or isnt it worth it if you're not entitles to the 1:1 trade at 1.55?

 

[oldblue]

We're starting to get into deep water here. Every situation is different and market conditions, which can change quickly, have a big bearing on what might happen.
But see post #211 in this thread.

 

[ozbecool]

BSL - 1 for 1 offer - entitlements vs buy/sell

Has it been confirmed that you can do this and still receive the offer? I'm in to buy more BSL at 1.55

Re post #231 and #233:
Be CAREFUL with this - see my post #212 - even BSL support phone line (13-13-44) does NOT know the 100% answer to the Q: "if I buy on 08 May - will I be entitled". The lady told me that PROBABLY one will not be entitled.

This uncertainty is in my opinion one of the reasons that the stock trades near $2.4 instead of $2.0 mark. And on Mon 11 May there will be : a big profit taking / account reconciliation for those that : have N shares + will opt for the offer for another N shares but at the same time want to keep N (not 2*N) shares for future - they will sell their N shares as they will get the N back in a few weeks time for $1.55. And this "N" selling will be a strong (even though probably not long lasting) down pressure on price.

As per post #211 - stock will probably recover in coming weeks / months and start climbing up considering the following:
- 'improved' debt position of the company and lowered gearing
- very low PRICE/BOOK VALUE of ~ 0.5 (book value as on Jul 08 was around $5).
- low P/E ratio of ~ 5.5 (in this industry peers avg P/E is 10-11)

And remember - it is a well known approach (vide W.Buffett, even though his methods are not as good as others - eg. Ed Seykota) - if you think that the company is a good company and you can get it for a very good price then all you have to do is patiently wait and you will be rewarded for your patience.

 

[jono1887]

So did you have to be holding the stock on Tuesday to be able to get the offer at 1.55?? Because I just bought it on Thursday at 2.24.... and when will this go through? Will the stock drop below $2 now after the dillution occurs??

 

[nawshus]

BSL doesn't look like it's heading in the right direction. What do long-term holders feel about this stock?

 

[oldblue]

So did you have to be holding the stock on Tuesday to be able to get the offer at 1.55?? Because I just bought it on Thursday at 2.24.... and when will this go through? Will the stock drop below $2 now after the dillution occurs??

There are different opinions expressed on this point on this thread as you will see if you read the last few days.
I maintain that the shares traded "ex entitlement" after the tading halt, ie you don't get the entitlement offer.
Personally, I wouldn't have been buying at that time without getting a clear opinion on the point from my broker.

 

[The_Bman]

Interesting this isn't in the ASX news: Bluescope wins $20m Navy contract

http://www.abc.net.au/news/stories/2009/05/11/2566382.htm?section=justin

Have to be happy with a $1.55 parcel here.