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AvidFan

Do We Need A Rights Issue Thread Or Sticky Thread?

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RSA looking for £1bn, 2nd Sept '09:

http://www.telegraph.co.uk/finance/newsbys...ghts-issue.html

National express looking for £300m, 29th August '09:

http://business.timesonline.co.uk/tol/busi...icle6814978.ece

Johnston press looking for £85m, 29th August '09

http://www.sundayherald.com/business/busin...2528140.0.0.php

We must have missed loads of these. Nothing is quite as destructive as a rights issue: diluting existing equity in terms of its value and yield and without any guarantee of what you invest you will ever get back.

Economies investing in themselves, destroying existing value and potentially destroying new money... Mmmm. Are these hollowed-out companies with huge debt burdens the products of private equity/venture capital groups - looted from the inside and set free with no tax liabilities but conversely little or no chance of ever remaining solvent?

So the perpetrators of the crime have taken the money and run... John Moulton has recently resigned from Alchemy partners:

http://business.timesonline.co.uk/tol/busi...icle6820665.ece

Is this another scandal waiting to break? How many more debt-laden companies will have to go to the markets for money they should have had but has been taken from them by greedy "alchemists" who were working within a tax regime that seemed to favour debt loading over any form of solvency? Was it ever a good idea?

The collapse of the West has only just begun - and increasingly, it appears the only people with a future will be those who milked it for all they were worth when times were good.

Rights issues are just like wage reductions, working time reductions, smaller chocolate bars for the same money blamed on supply-side problems, the £15K super-mini car where a £13K family saloon used to be, and so on. It's a loss of wealth by stealth. No need for inflation, just an introverted churn of money that gets smaller and smaller at each turn with the creamed-off money being labelled as a "loss" and socialised or sold to the unwise investor while at the same time labelled as a "profit" and paid to the bankers.

Do we need a rights issue thread then?

Edited for Moulton link!

Edited by AvidFan

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I think you are reading too much into this.

RSA is because of stricter solvency requirements being imposed on insurers by the EU

Johnstone Press is because its business model is in the process of being destroyed by the Interweb

National Express is because of a failed rail franchise operation.

I don't think there is a theme here.

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I don't think there is a theme here.

I do.*

At any rate, it is worth a thread.

*V V

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