Replies to post #96681 on Sino Agro Food Inc (fka SIAF)

[RealDutch]

I am rather convinced that we will have to pay something for each share we will be offered.

No, man. That would be ridiculous. You will simply end up owning 70% of the new company. They will issue new shares to new investors I suppose, resulting in 30% dilution. That would probably get them between $100M and $150M in cash.

What you are referring to is called a "claim emission" (in Dutch). That's when companies are in dire need of cash and offer new shares at a discount. The existing shareholders get the "opportunity" to buy them first. Of course it's a squeeze and a rip-off but the alternative could be Chapter 11.
SIAF is not forced to acquire a stake in the fish farms. They will only do it on reasonable terms. And that means, it has to add value to existing shareholders. Otherwise, what would be the point.

[snow]

gnu

I take it for granted that the shareholders of SIAF will have those shares for free.

[emptyone]

Gnu, spinoffs don't work that way, you own 100% of a stock unit, the split off takes something away, so you now own a portion of the original company and a portion of the new company. Nothing really happens with your money. You need to figure out your cost basis in both company shares ( I suppose the company helps you out with that).

There is some concern that new shareholders could get favorable treatment but that probably will have to be done with warrants or some conversion provision for debt issuance provided from these same shareholders. All in all day one all shareholders should be treated the same.