Q: The company has just issued more shares in a bought deal. I am trying to understand if this is beneficial/detrimental to shareholders and the company. In my mind, on the negative side, there is dilution, the stock is to reduce debt (despite the fact that debt should be cheap these days) and not for acquistion, and it brings to market more shares when the shares of this company haven't done much for quite a while anyway.
On the plus side, it brings attention to the company since the underwriters will now be beating the bushes to sell the stock and less debt should increase company flexibility should a deal come down the road.
I know you like companies that don't tend to issue stock. Should this deal be viewed as negative? Also, I assume the difference between the share price to the underwriters and current market price is the dealers profit. Typically, how long will dealers hold onto shares to ensure they don't flood the market and lower the share price vs. sell the new shares in an orderly fashion to maximize their profits.
Appreciate your insight.
Paul F.
p.s. love all of the new changes
On the plus side, it brings attention to the company since the underwriters will now be beating the bushes to sell the stock and less debt should increase company flexibility should a deal come down the road.
I know you like companies that don't tend to issue stock. Should this deal be viewed as negative? Also, I assume the difference between the share price to the underwriters and current market price is the dealers profit. Typically, how long will dealers hold onto shares to ensure they don't flood the market and lower the share price vs. sell the new shares in an orderly fashion to maximize their profits.
Appreciate your insight.
Paul F.
p.s. love all of the new changes
