Alcidion Group Limited

ASX:ALC

Alcidion Group Limited

ASX:ALC
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$0.064 (-3%)
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#24
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68
Held by
110
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Reports (14) My Report Forum Investors
Forum Topics ALC ALC ALC SPP Trading Strategy
wishkey
Added 4 years ago

Company explicity states they will consider multiple factors when scaling shareholders incl. how many shares you hold, how late you applied for your allocation, whether you have recently sold, how long ago you originally bought. Whether or not they will actually consider all these factors is dubious, but in terms of risk it's definitely tricky. Good rule of thumb: In circumstances where you wished you got a full allocation (share price rising close to settlement day), you will likely be underallocated (particularly if you applied late) and in circumstances where you don't want a big allocation, e.g. stock is trading under the raise price, you will likely get a full allocation. For these reasons, looking for quick trading profits in cap raises is tricky (unless you're a broker's pet) and you're best making the decision with a longer timeframe in mind. Good luck!

13
umop3pisdn
Added 4 years ago

The details of the Share Purchase Plan were released to investors today.

The maximum offer is $30,000 at $0.32 per share.

If one was to already own over $30,000 of Alcidion shares, is a valid trading strategy to sell $30,000 at today's price (currently down to around $0.35) to purchase the shares through the SPP?

What are the risks in doing this?

One I can think of is that the offer is not underwritten and the ending date may be changed at any time. This may result in the sale of shares without being able to purchase any shares through the SPP. Mitigation to this risk is the ability to purchase the originally sold shares back at market price.

9
Rapstar
Added 4 years ago

There are lots of implications of this, including tax implications, which are very specific to you.   The risks I see are:

1) Tax liability.  Depending on your current holding period, you could end up losing out, noting the 50% discount if held fo rlonger than a year for example.  Your top marginal tax rate is also a factory, as are nay unrealised losses. 

2) Oversubscribed offer.  Given they are only looking to raise $2.5 Million, the offer is likely to be massively oversubscribed if there is a reasaonable discount to the market.  In all likilood, you will receive only a farction of the shares you applied for.  

In these situations,  the tax implications, and scaling back risks would stop me from doing it, but we are all in unique circumstances.  So, just consider what the tax liability is for selling, and see whether the benefit will offset the costs - Consider it may well be scaled back too.

Sean 

15