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Rights Issue Methods Od Raising Finance Case Study of Zambian Brweies

Essay by   •  January 3, 2012  •  Essay  •  291 Words (2 Pages)  •  1,628 Views

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A rights issue is a method of raising capital were, companies isue new shares and gives existing shareholders the option to aquire them. this method is available all businesses which are operating as corporations and have already common stock to shareholders.

A rights issue is a well preffered method of raisng capital beacause it does not dilute the existing share wownwership structure. second it all offers the existing shareholders the opprotunity ti aquire more shares at a price lower than the market price.

share holders who do not wish to take up the shares are allowed not to take the option.

Zambian breweiies is a bevergae producing company operating i the republic of zambain. It is a susbsidiary of SAB miller thye gloabl beer mnufcturer. Zambian breaeries has been liseted on the lusaka stock exhcange since 1995 nad has usscesuly conducected thre rights issues to raise capital.

the first rights issue was done in 1999 through pangea securities (a stockbroker registred at the luska stock exchange) to raise money to aquire northern breweries a smaller breweries based on the copperbelt provice of zambia.

The second rights issue was done in 2002 to aquire copperbelt bottlong comapny which was registred manucafruter and distributor of soft drinks such as cocacola.

The third and latested rights was conducted in in 2011 to finance the exansion of the production line at northern breweiries to diversify the range of producst.

All these rights issue have been well recived by the share holder s and have enabled the caonpny to raise the required resources.

Inb cinclusion it can be said rights issue is a very viable method of raising caiptal on the luaska stock as deostrated the thresuusceful rights issues cnducted by zambian breweies of a three decade period.

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