As the world starts to reopen and reconnect, companies severely affected by the Covid-19 pandemic are beginning to implement their recovery plans.
One of these is Air New Zealand (NZX: AIR), who recently announced a recapitalisation package that includes a renounceable Rights Offer to shareholders.
Here’s what we think investors should be aware of when considering this offer.
However, investors should be aware that, by issuing so many shares, Air New Zealand’s value will be diluted, with the post-issue price likely to be a little over 80c.
This is a massive loss to anyone who bought the shares in recent years, that will be only partially made up by the gain that can be made on buying the new shares.
The Stockfox team’s view is investors need to look at what their initial entry price was and calculate the benefit from making a further investment. We suspect that, for many, there may be very little upside. If so, you may wish to consider selling your rights, which are tradable through your broker.