Mitie rights issue HELP

Does a rights issue cause people to short this stock, is this why Mitie fell so much yesterday?


You can short anything. So, yes, but mostly no.

The price drop was absolutely inevitable as it was maths.

The stock went ex rights yesterday so a flood of nil paids hit the market at a 70% discount on an 11 for 5 basis.

That means the old share value + new share value = whole company value / new quantity of shares.

With such a deep discount the very rough price the stock would be worth ex-rights would be about 42p (I’m Rounding, but approx.)

BUT you now own a Right… which has value … and is tradeable or Convertible to New ordinaries. Your choice.
I’ve seen a few new brokers not post the Right to client accounts… which is odd… but they might just give you the cash on the lapse of the right… that seems wrong to me… but, hey, they must have a reason for it.

The rationale for the raise affects sentiment though! Why are they raising ? If they’re in a terrible financial position is different to ‘because they want to fund acquisitions’

I’d be very curious to know if zero fee brokers are crediting Nil Paids to clients accounts and how they’re handling the corporate action. Mitie holders let me know…