This assessment of the theoretical impact of Widespread Portfolio Limited's (WID) proposed rights issue has been prepared at the request of its board by Capital Economics Limited. The focus of the assessment is on the potential of the issue to shift wealth between categories of equity securities and between large and small shareholdings. The following sections of this report consider, in turn:
- the scale of the issue in terms of its potential to cause significant effects on the unit prices of WID's equity securities
- the scale of the potential adjustments to the exercise prices for WID's warrants under section 9 of the terms for the warrants
- the theoretical implications of the issue for the relative unit values of WID's equity securities; and
- the potential distributional effects of these potential changes in unit values.
A final section draws some conclusions from this investigation.