Spotless Group Limited

Spotless Group - $4.40: While the hangers may be a perfect fit for Spotless, the share price has taken a quick trip south on news that a 1:20 rights issue will be offered to shareholders. Approximately 6.6 million shares will be offered at a price of $4.00 per share, representing a 14.2% discount to the closing price on April 20, 1999. About $26m is expected to be raised from the issue and will be used to lower debt levels and take advantage of new opportunities. With the full potential of the plastics division still to be realised and acquisitions fuelling growth of the more mature services division, we're positive about the company's investment credentials. Don't expect any out-performance until the rights issue is out of the way as investors wanting exposure to Spotless will opt for the discounted rights as opposed to buying stock on the market. Shareholders should take up their rights entitlement otherwise the stock can be ACCUMULATED closer to $4.00.