Would this scenario make sense?

[stockpile]

Hi all, new in the game and just trying to learn all the moves.

I have 8000 shares in VMS and I purchased them at 37.5 cents. VMS have just released short form prospectus for the placement of further 6.5 mil shares. Minimum subscription is 10000 shares and they are offering them at 33 cents. The listed shares are currently trading at 41 cents.

What my question is, would it be in my interest to sell my currently listed shares in VMS and purchase through the short form prospectus? If I were to sell at 41 cents I would make slight profit and then use that same amount of money (approx 3333 AUD) to acquire 2000 more shares than I previously had through the short form prospectus.

Is this a no brainer, or are there trappings I should be wary of?

 

[ROE]

Hi all, new in the game and just trying to learn all the moves.

I have 8000 shares in VMS and I purchased them at 37.5 cents. VMS have just released short form prospectus for the placement of further 6.5 mil shares. Minimum subscription is 10000 shares and they are offering them at 33 cents. The listed shares are currently trading at 41 cents.

What my question is, would it be in my interest to sell my currently listed shares in VMS and purchase through the short form prospectus? If I were to sell at 41 cents I would make slight profit and then use that same amount of money (approx 3333 AUD) to acquire 2000 more shares than I previously had through the short form prospectus.

Is this a no brainer, or are there trappings I should be wary of?

My opinion only and don't take it as a recommendation or anything...
A company selling more shares is a company struggling for cash, and the cheapest cash there is, is share holders money as it doesnt pay interest

If I was you, I take my short profits and reapply for the extra shares if you still want to invest in the company., that way you hedge both way and lose less if it all go belly up, otherwise take your profit and run and find something else

 

[stockpile]

Appreciate your opinion ROE thanks.

 

[Chorlton]

Hi all, new in the game and just trying to learn all the moves.

I have 8000 shares in VMS and I purchased them at 37.5 cents. VMS have just released short form prospectus for the placement of further 6.5 mil shares. Minimum subscription is 10000 shares and they are offering them at 33 cents. The listed shares are currently trading at 41 cents.

What my question is, would it be in my interest to sell my currently listed shares in VMS and purchase through the short form prospectus? If I were to sell at 41 cents I would make slight profit and then use that same amount of money (approx 3333 AUD) to acquire 2000 more shares than I previously had through the short form prospectus.

Is this a no brainer, or are there trappings I should be wary of?

Hi StockPile,

I agree mostly with ROE's comments. However, one shouldn't only assume that a placement is purely a negative action.

Also, its worth noting that in my experience I have seen a number of companies who's SP (following a placing) have dropped back to that original placing level anyway - albeit for a short-period of time!! My observations were with UK Companies so it may or may not happen so much here..........

All the best,

Chorlton