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bananas

(27,509 posts) Mon Apr 25, 2016, 11:33 PM Apr 2016

Shares in EDF Dive on First Day of Trading After it Unveils $4.5 billion Capital-Raising Plan

Source: Wall Street Journal

Shares of French state-controlled power utility Electricité de France SA, or EDF, plunged on Monday morning on the first day of trading after the company unveiled a plan to raise €4 billion ($4.5 billion) by selling new shares.

Shares of EDF were trading at €11.33 by mid morning, down 7.5% compared to the share price at market close on...

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Read more: http://www.wsj.com/articles/edf-to-go-ahead-with-u-k-hinkley-point-nuclear-plant-after-capital-increase-1461568044

2 replies

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Shares in EDF Dive on First Day of Trading After it Unveils $4.5 billion Capital-Raising Plan (Original Post) bananas Apr 2016 OP

French state-controlled power utility Pharaoh Apr 2016 #1

Share prices melm00se Apr 2016 #2

Pharaoh

(8,209 posts)

1. French state-controlled power utility

Reply to bananas (Original post)

Mon Apr 25, 2016, 11:57 PM

Apr 2016

did it fail because it is state owned?

melm00se

(4,993 posts)

2. Share prices

Reply to Pharaoh (Reply #1)

Tue Apr 26, 2016, 07:32 AM

Apr 2016

dropped because of the sale of newly created shares to generate capital.

This diluted the existing shares thus, in the short term, making them less valuable.

To simplify this concept:

Imagine that there are 10 total shares of a company. Each share represents 10% ownership of the company. The company then decides to raise additional capital and creates another 10 shares to sell. now there are a total of 20 shares of the company which each now represents 5% of the company. Would you pay the same for a 10% stake in a company as you would for 5% of the same company?

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