Prime Office AG (DE000PRME020) – Strange rights issue
I have linked to the “special situation” stock Prime Office already in the past. The story in short:
Oaktree has effectively taken over a struggling German Office Reit by contributing a portfolio of office assets of their own. They then changed the status from REIT to “normal” company. In order to reduce the debt level, they started a rights issue a few days ago.
However this rights issue has a strange twist: Although the subscription rights are already traded (ISIN DE000PRME1B7), they did not publish the subscription price of the new shares yet.
Just as a reminder, let’s look how the value of a subscription right is calculated (from Stockopedia)
The calculated value of a subscription right. The theoretical value of a right during the cum rights period – which is the interval after the announcement of the rights offering but before the stock trades on an ex-rights basis – is calculated by the formula:
(Stock Price – Rights subscription price per share) / # of rights required to buy one share + 1
What we do know is that there will be 8 new shares for 23 old shares, that they are offering (up to) 46.58829 mn shares and that they want to raise 130 mn EUR. So one could calculate a theoretical subsrciption price of (130/46.59) = 2.70 and a value of the subscription right at the time of writing of (2.81-2.70)/(23/8+1)= 0.0283 EUR which is silghly lower than the traded prcie of 0.031 EUR per right.
But what I am asking myself is the following: Why did they do this in such a strange way ? Why didn’t they fix the price in the beginning as in very rights issue I have seen up to now ? I have no idea but I will watch that one closely.