Hi, any placing of extra shares issued In a company could potentially dilute that companies share price, simply because you have more shares in issue, therefore you would have to share out any profit/potential profit/assets between a larger number of shares, notwithstanding that the extra cash raised would go part way to add towards increased assets, thereby alleviating some of the dilution, the main point to watch here is what happens to the extra funds, If they are put to use fairly quickly and used for a worthwhile purchase/purpose then the extra funds raised could quickly become an enhancement to the share price, It`s a case of watch this space I`m afraid.
If you have doubts about a company because of this type of situation, you first need to decide whether or not this Investment is right for you, If you feel unsure, either wait and see the outcome before you purchase, or If you already hold then consider a sale of your shares and standback to watch developments unfold, however If the latter to my paragraph above arises then you would have to pay a premium to buy back the shares.
It is all about risk and how confident you are In your Investment, ALSO are you short term........or long term......short term punts can work, but I prefer to look at the bigger picture! ie: med--long term. DYOR hope that helps.
Another point worth a mention is...........when small companies want to raise funds they need to be cost effective, this is in "all share holders Interests" to put together a rights issue would not only be time consuming but would add a lot further dilution to the funds raised as costs would be far greater, and therefore less beneficial to share holders, the very fact that these new funds have been raised so quickly and easily gives me confidence that something positive will ensue
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