Well Chip plans to issue a RM120 mil rights issue to fund its pawnshop expansion. We shared about the pawnbroking industry before: https://www.doitduit.com/p/conversation-with-pawnbroker-soaring-gold-price-and-pawnbrokers

Share price crashed -15% since the rights issue announcement and -30% YTD. Well Chip is now trading below its IPO price.

Let’s assess this cash call to see if it’s a good time to enter.

Details of Rights Issue

Mechanics of Well Chip rights issue:

In simple words:

• Every shareholder will be given the 1 “rights” for every 5 Well Chip shares, e.g. 200 rights for 1,000 shares. This “rights” will appear in your trading account;

• Shareholders can choose to exercise or sell the “rights”;

• If shareholder exercise, then they need to pay the RM1.00 minimum issue price for every right to receive Well Chip shares; and

• If shareholder sell the “rights” on the market, shareholder will receive the market price of the “rights” and cannot exercise the “rights” anymore.

The reason for the rights issue:

Why Rights Issue

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