Question

2016 GOIL Renounceable Rights Issues in 2016. The notice we discussed in class said that, GOIL...

2016 GOIL Renounceable Rights Issues in 2016. The notice we discussed in class said that,
GOIL would issue 13,639,640 shares of no par value, and at a price of GHC 1.24 per share and in a ratio of 0.5536 new shares for one share held by a qualified shareholder. The offer was opened on May 3 and ended on May 18, 2016. Existing shares were selling at a price of GHC 1.46 per share on March 21, 2016, the day of the announcement. Proceeds from the offer would be used to strengthen GOIL’s balance sheet, expand its current retail outlets, acquire a lubricant blending plant, and expand facilities at the Takoradi Harbour, among others.

Questions
i. How many rights were issued under this offer? [2 marks]

ii. How much was GOIL expecting to raise? [3 marks]

iii. Before this offer, how many shares had been issued by GOIL? [5 marks]

iv. What was the theoretical value of GOIL soon after the close of the offer, if all rights were exercised? [5 marks]

v. What is the theoretical value of a share of GOIL after this offer? [5 marks]

vi. How much would a shareholder who held 1,000 shares before this offer have realized if he/she had sold the rights he/she received? [5 marks]

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