icon
icon
icon
icon
$300 Off
$300 Off

News /

Articles /

Vow ASA: Rights Issue Kickoff - Opportunities and Dilution Factors

Eli GrantMonday, Nov 25, 2024 1:38 am ET
5min read
Vow ASA, a Norwegian company specializing in pollution prevention and clean energy solutions, has kicked off the subscription period for its rights issue. This fully underwritten offering aims to raise NOK 250 million, with a subscription price of NOK 1.50 per share. The issue, which began on November 25, 2024, and will run until December 9, 2024, has received significant backing from the company's largest shareholder, DNB Bank ASA, and several external investors.

DNB Bank ASA's pre-commitment to subscribe for its pro-rata share of the rights issue, totaling NOK 64,170,000, signals a vote of confidence in Vow ASA's future prospects. This commitment, made without any fee or consideration, sends a positive signal to other investors, potentially boosting their interest in the rights issue. Additionally, the involvement of three existing shareholders and seven external investors, who have pre-committed and underwritten an amount of NOK 185,830,000, guarantees the entire NOK 250 million issue. This underwriting reduces the risk for other investors and may attract more subscribers, as it indicates that the company's growth potential is recognized by diverse market participants.



The listing of Subscription Rights on the Oslo Stock Exchange is another strategic move aimed at enhancing the rights issue's visibility and appeal to investors. The subscription rights, under the ticker code "VOWT," are tradable from November 25, 2024, to December 3, 2024, coinciding with a significant portion of the subscription period. This listing enables both existing shareholders and potential investors to trade these rights on the exchange, increasing liquidity and accessibility. The trading period also allows investors to potentially profit from price movements, enhancing the attractiveness of the rights issue.

However, while the rights issue offers opportunities for investors, it also presents dilution factors for existing shareholders. The issuance of 166,666,666 new shares dilutes the ownership of existing shareholders who do not exercise their subscription rights. The dilution factor can be approximated as (Number of new shares issued / Total outstanding shares after issuance) - 1, which in this case results in approximately 14.4% dilution for non-exercising shareholders.

To mitigate potential dilution effects, underwriters play a crucial role in a rights issue. In Vow ASA's fully underwritten rights issue, underwriters have pre-committed to subscribe for a significant portion of the new shares, ensuring that the entire NOK 250 million issue is guaranteed. This pre-commitment reduces the number of new shares available for public subscription, thereby lessening the dilution impact on existing shareholders.

AAOI, ABL, ACHR, ALAR, AMIX...Market Cap, Turnover Rate...


The subscription price of NOK 1.50 per share in Vow ASA's rights issue could also impact the dilution experienced by non-exercising shareholders. Each existing shareholder receives 1.464117 subscription rights per existing share, allowing them to subscribe for 1.464117 new shares at the discounted price. For those not exercising their rights, the dilution can be calculated as follows: Dilution = (Number of new shares issued / Total number of shares) * 100. Assuming all subscription rights are exercised, the dilution would be approximately 15.6% (166,666,666 new shares / 1,062,500,000 total shares). Non-exercising shareholders would see their ownership percentage decrease, and their share of future earnings would be diluted by this amount.

In conclusion, Vow ASA's rights issue offers investors an opportunity to participate in a company with a strong commitment to preventing pollution and generating clean energy. However, existing shareholders must consider the dilution factors and weigh the potential long-term benefits against the short-term impact on their ownership percentage. As with any investment decision, it is essential to conduct thorough research and consult with financial advisors to determine the appropriate course of action.
Comments

Add a public comment...
Post
User avatar and name identifying the post author
RamBamBooey
11/25
Pre-market support is key, underwriting not a bad thing
0
Reply
User avatar and name identifying the post author
Aime
11/25
$VOW rights issue looks solid; might add some shares
0
Reply
User avatar and name identifying the post author
Bossie81
11/25
Clean energy plays are gold mines long-term.
0
Reply
User avatar and name identifying the post author
Versace__01
11/25
Rights listing boosts liquidity, maybe short-term gains.
0
Reply
User avatar and name identifying the post author
Sensitive_Chapter226
11/25
DNB backing $VOW seems legit. 📈💰
0
Reply
User avatar and name identifying the post author
oakleystreetchi
11/25
DNB Bank's backing gives me confidence. Vow ASA might be a sleeper hit in clean energy.
0
Reply
User avatar and name identifying the post author
A_Moron_In-Existence
11/25
Diversification is key. Vow's commitment to clean energy and pollution prevention is a strong play on sustainable trends. I've got a modest position, planning to hold long-term. Watching the market, might add more if it dips post-rights issue. 🤑
0
Reply
User avatar and name identifying the post author
wodentx
11/25
14.4% dilution hurts, but growth potential matters
0
Reply
User avatar and name identifying the post author
Particular-Ad-8433
11/25
Subscription price feels low, but those external investors know what they're doing. 🤑
0
Reply
Disclaimer: the above is a summary showing certain market information. AInvest is not responsible for any data errors, omissions or other information that may be displayed incorrectly as the data is derived from a third party source. Communications displaying market prices, data and other information available in this post are meant for informational purposes only and are not intended as an offer or solicitation for the purchase or sale of any security. Please do your own research when investing. All investments involve risk and the past performance of a security, or financial product does not guarantee future results or returns. Keep in mind that while diversification may help spread risk, it does not assure a profit, or protect against loss in a down market.
You Can Understand News Better with AI.
Whats the News impact on stock market?
Its impact is
fork
logo
AInvest
Aime Coplilot
Invest Smarter With AI Power.
Open App