$AVIO Rights Issue — A Guide (Primer)

1) What is a rights issue?

A rights issue is a way for a listed company to raise equity by offering existing shareholders the right to buy new shares at a set subscription price (often at a discount) in proportion to their holding. If the rights are renounceable, they can be traded separately from the ordinary shares during a defined window; if non‑renounceable, they cannot be sold/transferred.

Record date: determines who receives the rights.
Cum vs ex‑rights: before the rights detach, the share trades cum rights; afterwards, it trades ex rights.
Renounceable rights: typically quoted and tradable on‑market; they have fair value derived from parity with the ordinary shares.
Dilution: if you neither subscribe nor sell your rights, your ownership percentage falls.

Further reading: Understanding rights issues; Renounceable rights.

2) AVIO (AVIO.MI) — Terms & Context

AVIO has launched a 3‑for‑4 renounceable rights issue at €20.37 per new share. Rights trade and can be exercised within set windows (CET). The capital raise is intended to support industrial capacity and growth initiatives.

Subscription price (S): €20.37
Ratio (a): 3 new for every 4 old (a = 3/4 = 0.75)
Rights trading window: Mon 3 Nov → Tue 11 Nov 2025 (inclusive)
Exercise period: Mon 3 Nov → Mon 17 Nov 2025 (brokers may set earlier cut‑offs)
Offer type: Renounceable (tradable) rights
Coordinators/bookrunners: named investment banks appointed

Context coverage: Reuters on capital increase. Company info: AVIO — Investors.

Ownership impact (if fully taken up)

Illustrative: shares outstanding rise from ~26.17m to ~45.80m. If you don’t subscribe (and don’t sell rights), your percentage ownership drops ~42.86% (100% → 57.14%).

3) TL;DR — What should I do?

Bullish / willing to add cash: Subscribe in full (avoid dilution).
Neutral / prefer no cash outlay: Do a cashless tail‑swallow (sell some shares or rights to fund the take‑up).
Sceptical / reducing exposure: Sell the rights during the trading window (don’t let them lapse).

Important: Doing nothing = rights lapse and you lose value versus subscribing or selling.

4) Core Maths

Let P = current cum‑rights share price; P_ex = ex‑rights share price; S = 20.37; a = 3/4.

TERP (Theoretical Ex‑Rights Price)

TERP = (4·P + 3·S) / 7

Intuition: a 7‑share "basket" (4 old at P, 3 new at S) blended.

Value of a Right

R_cum = P − TERP

R_ex = (3/4)·(P_ex − S)

Parity (sanity check)

S + (4/3)·R_ex ≈ P_ex

Rights needed per 1 new share: 4/3 ≈ 1.333…

5) Worked Example — You Hold 100 Shares

Entitlement: 75 new shares (= 0.75 × 100)
Cash to subscribe: €1,527.75 (= 75 × 20.37)

A) Subscribe 100% (add cash)

Pay €1,527.75 → end with 175 shares. Avoid dilution; economically neutral vs selling rights at fair value (fees aside).

B) Cashless “tail‑swallow”

Sell some stock (or rights) to fund the take‑up. Rule of thumb (sell stock):

shares_to_sell = (0.75 · N · S) / P_ex

With N=100, S=20.37, P_ex≈TERP → ~51 shares → end ≈ 124 shares (= 100 − 51 + 75).

Equivalent: sell ~68 rights and subscribe the rest (mind lots/fees).

C) Sell all rights

During 3–11 Nov, sell rights for cash; keep your 100 shares but accept dilution.

Tactical: dislocations vs parity (rights too cheap/dear; ex‑line overshoot) can offer edge.

6) IBKR — Operational Notes

Rights issues are voluntary: elect via Corporate Action Manager (Client Portal → Corporate Actions).
Default if you do nothing: no election; rights lapse at expiry unless sold or subscribed.
Deadlines: IBKR may set internal cut‑offs earlier than market deadline.
Rump/lapsed proceeds: only if the issuer places lapsed rights at a premium (not guaranteed).

Docs: IBKR — Corporate Action Instructions · IBKR — Corporate Actions

7) Practical Playbook (copy‑paste handy)

TERP: (4*P + 3*S)/7
Right (cum): P − TERP
Right (ex parity): (3/4)*(P_ex − S)

Cash to fully subscribe (hold N): 0.75*N*S
Shares to sell for cashless take‑up: (0.75*N*S)/P_ex
Rights needed per new share: 4/3

8) FAQ

Q: Are rights auto‑sold for me?
A: Not at IBKR. You must sell or subscribe. Otherwise they lapse.

Q: Do fractions matter?
A: Rights trade in whole units; fractional entitlements are typically rounded down at broker level. Check your broker’s rules and lot sizes.

Q: Buy now (cum‑rights) or wait (ex‑rights)?
A: At parity they’re economically similar (fees/execution differ): buy‑now+subscribe ≈ buy ex‑rights ≈ buy rights+subscribe.

Q: What should I anchor to?
A: TERP is the clean anchor for ex‑date mechanics. Fundamentals decide if TERP is attractive.

9) Notes & Caveats + Outlinks

Dates are CET and based on issued timetables; brokers may set earlier internal deadlines.
Rights trading/exercise involves market and operational risk; check fees, taxes, and odd‑lot handling.
This is mechanics, not investment advice. Pair with your fundamental view on AVIO’s post‑raise outlook.

AVIO — Investors / IR contacts Reuters — Capital increase context IBKR — Corporate Action Instructions IBKR — Corporate Actions (policies) Primer — Understanding rights issues Primer — Renounceable rights