How this calculation works
A paid rights issue adds cash and shares together. A discounted subscription price therefore does not mean the existing shareholder receives a free gain equal to that discount. Theoretical ex-rights price spreads the combined value over the enlarged share count. This page reconciles the ratio, theoretical entitlement and cash required for subscription. It is a mechanical no-market-movement scenario rather than a prediction of the exchange price after the issue.
TERP = (old ratio × old price + new ratio × subscription price)/(old ratio + new ratio)A worked example
Five old shares at one hundred plus one new share subscribed at sixty combine value five hundred sixty across six shares. TERP is therefore 93.3333 per share. A holder of one thousand old shares has theoretical entitlement to two hundred new shares and needs twelve thousand currency units for full subscription. The old-share reduction is about 6.66667 per existing share.
Good to know
Fees, tax, market response, underwriting terms and actual allotment rules are excluded. TERP assumes the entered old equity value and new cash are the only changes. This calculator does not recommend subscribing, selling rights or buying shares. A theoretical arithmetic value is not an executable market quote or investment forecast.
Reference: CISI — theoretical ex rights price (opens in a new tab) ↗
What this calculation answers
A paid rights issue adds cash and shares together. A discounted subscription price therefore does not mean the existing shareholder receives a free gain equal to that discount. Theoretical ex-rights price spreads the combined value over the enlarged share count.
This page reconciles the ratio, theoretical entitlement and cash required for subscription. It is a mechanical no-market-movement scenario rather than a prediction of the exchange price after the issue.
The Portfolio rebalance trades with cash contribution calculator reconciles target portfolio values after a cash change. A rights subscription similarly needs separate accounting for new cash and enlarged share count.
Use the right input conventions
Enter the old and new share counts exactly as an offer ratio, such as five old for one new. Old price and subscription price must use the same currency per share.
The held share count scales the entitlement and cash requirement but does not change TERP. Fractional entitlements are displayed theoretically; the tool does not guess whether a real offer rounds, aggregates or pays cash for fractions.
Interpret the result
The old-share price reduction is old price minus TERP. It can be negative if a premium subscription price is entered, so the output is labeled a theoretical reduction rather than guaranteed rights-sale proceeds.
The page does not determine whether the rights can be sold or exercised by a particular investor. Those terms, deadlines and account eligibility belong to the actual offer documents.
Work through the example
Five old shares at one hundred plus one new share subscribed at sixty combine value five hundred sixty across six shares. TERP is therefore 93.3333 per share.
A holder of one thousand old shares has theoretical entitlement to two hundred new shares and needs twelve thousand currency units for full subscription. The old-share reduction is about 6.66667 per existing share.
Where the model stops
Fees, tax, market response, underwriting terms and actual allotment rules are excluded. TERP assumes the entered old equity value and new cash are the only changes.
This calculator does not recommend subscribing, selling rights or buying shares. A theoretical arithmetic value is not an executable market quote or investment forecast.
A few questions, answered
Does setting a low subscription price create value by itself?
No. More shares share the combined old equity value and new subscription cash in the theoretical calculation.
What changes in the comparison?
Change only the holding size; TERP stays fixed while entitlement and cash requirement scale.