Implications of a Rights Issue?

[Dan Mac]

I've got a short CFD position in BSL, can anybody explain to me what implications the rights issue has?

My broker seems to have have opened an additional short position automatically?

Thanks Daniel

 

[skc]

I've got a short CFD position in BSL, can anybody explain to me what implications the rights issue has?

My broker seems to have have opened an additional short position automatically?

Thanks Daniel

As a short party, if some one was to take up those rights, you are liable to sell them shares at the issue price.

Your CFD provider (not broker) may have borrowed shares from an insto who has taken up the rights, hence the additional short position in your account.

Lucky you.

But best to check with them as my interpretation could be completely wrong.

 

[Dan Mac]

Thanks skc. That's what I thought. My account is showing the closing price at 51 cents, which is confusing me. My other software and ASX site is showing 39 cents. Hopefully its just a computer glitch and it resolves itself tomorrow.

Thanks again

 

[samir13ali]

I dont understand what happened to BSL shares!

Can someone explain to me using the following example.

I had 30000 shares @ 0.61 of BSL before the Hult. And sold them as soon as the hult was over @ 0.38, WTF

Now i have the 24000 BSLR shares, what is going on, can someone explain???

Thanks skc. That's what I thought. My account is showing the closing price at 51 cents, which is confusing me. My other software and ASX site is showing 39 cents. Hopefully its just a computer glitch and it resolves itself tomorrow.

Thanks again

 

[skc]

I dont understand what happened to BSL shares!

Can someone explain to me using the following example.

I had 30000 shares @ 0.61 of BSL before the Hult. And sold them as soon as the hult was over @ 0.38, WTF

Now i have the 24000 BSLR shares, what is going on, can someone explain???

BSLR are rights to BSL that entitles you to subscribe for new BSL shares at 40c. They are issued on a 4-for-5 basis on the number of BSL shares you have.

These entitlements were tradable (i.e. you can sell them on the ASX) but the trading period has ended on 7 Dec.

You can still choose to exercise your entitlement for the new shares, but the offer closing period is 14 Dec.

Check the company announcement to confirm the details and dates for yourself, and contact your broker/CFD provider etc if you wish to exercise the rights.

 

[SilverRanger]

Haven't been lucky enough to get into this situation, but my guess on a high level is that you are short the rights on ex-date, that is, you have an obligation to somehow fork out additional shares to be sold at issue price.

The actual treatment I think would depend on the provider, they may borrow more (possibly at issue price), or just cash settle it with you, whatever the treatment, this should be a deduction as you are making money on your original shorts on ex-date. Then again you should ask your provider and I'm sure they will read you a standard answer from their FAQ list.