At a meeting of the board of
directors of City Union Bank (CUB) held on Saturday, 3rd Nov, it was decided to fix the rights issue
price at Rs. 20 per share of Re. 1 face value. The existing shareholders will be offered
equity shares in the ratio of 1 share for every 4 held by
them. The record date has been fixed as November 23.
Considering the current price of
about 60, a very good opportunity exists, apart from long-term buying, even for
arbitrage i.e. buy in rights issue and sell in the market post Nov. 23. There
are always chances of getting more shares than eligibility though the proportion
may vary based on the response which again is a function of the ratio and
price. In this case at least, the last factor is extremely attractive. So
people are likely to apply for far more than they are eligible for. In that
sense, the additional share allotment will not be very high.
FII hold about 21% stake
in the company.
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