Harvey Norman offers new shares below the ‘crazy’ price of $4

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Harvey Norman offers new shares below the ‘crazy’ price of $4

 Harvey Norman offers new shares below the ‘crazy’ price of $4

Harvey Norman (ASX:HVN) wants shareholders to tip in $163.85 million but following the announcement of right issue, the company’s stock continues moving down. After massively falling 4.509% on the day of announcement, Harvey Norman’s stock sunk 0.144% to $3.475 today, i.e. 7 September 2018 (2:12 PM AEST).

Earlier in February arguing to the losses in Coomboona dairy business, Founder Gerry Harvey told its investors "If the share price goes down to $4 then sell your house. Sell your boat, sell your car, sell your house, buy Harvey Norman shares." [optin-monster-shortcode id="wxhmli4jjedneglg1trq"]

Yet, last week company offered its shareholders to buy HVN new shares at a discounted price of $2.50 per share. As per the release dated 31 August 2018, Harvey Norman Limited has announced renounceable pro rata right issue of $163.85 million in the ratio of 1 new share for every 17-existing share at an offer price of $2.50 per share.

If anything under $4 is crazy according to Mr. Harvey, then what makes the company to offer new scrip at, as heavy as 33.7% discount to the recent close of $3.77. Well, the company claims it to be in favor of offloading the consolidated entity debt.

However, in FY18 results released recently, company posted profit after tax of $375.38 million but the company has given the best shot to keep its shareholders happy with fully franked 30 cents dividend for the full year which has resultantly blown out company’s debt from $640 million to $755 million.

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