Shares in Pyne Gould Corp - which is loo1king to raise $237 million in a rights issue - dipped to a record low of 74c yesterday as investors continued to sell the stock down.
More than 2.5 million shares have changed hands during the past three days since the announcement, with its share price initially spiking from 99c to $1.18 before sliding past its previous low of 80c to close at 81c yesterday.
PGC left the Unlisted Market to go to the main trading board in March 2004, at $2.65 per share, and hit an all-time high of $5.40 in August 2005, but touched 74c per share yesterday.
The rural and financial services company's rights issue is underwritten by First NZ Capital Securities and its largest shareholder, George Kerr's company Pyne Family Holdings, has sub-underwritten for $27.2 million.
The issue is at a hugely discounted rate of 40c for each share, putting pressure on shareholders to come up with cash in hard times to underpin the issue, of six new shares for each one held at present.
Craigs Investment Partners broker Chris Timms said some investors would be exiting, rather than coming up with a significant amount to take up their rights issue.
However, some would be selling a percentage of their PGC shares in order to pay for their rights issue allocated to their remaining shares, on Wednesday.
Forsyth Barr broker Suzanne Kinnaird said the PGC recapitalisation programme was a positive development, positioning subsidiary Marac at the forefront of the non-bank lending sector in the new regulatory environment.
"The main risk is the likely demise of the finance company retail deposit funding channel after expiry of the Crown guarantee in 2011," she said PGC wants $50 million from the rights issue for investment in existing activities, $35 million for Marac to become a registered bank, and $35 million to wipe PGC parent company debt to zero.
About $13 million would be used to pay capital-raising transaction fees and also partially fund about $125 million of the sale of some Marac property loans to Marac Financial Services.
