2.3 The company aims to issue all its unissued shares in the near future. The price of the share on the JSE is currently 180 cents on 30 June 20.2 . In your opinion, how much could they raise from this issue and what should they do with the proceeds?

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To determine how much the company could raise by issuing all its unissued shares and decide on the optimal use of the proceeds, let's break down the analysis into two main parts:

### **1. Estimating the Funds Raised from the Share Issue**

**a. Understanding the Current Share Price:**
- **Share Price on JSE:** 180 cents (R1.80) as of June 30, 2020.

**b. Determining the Number of Unissued Shares:**
- The exact amount that can be raised depends on the total number of **unissued shares** the company has. This information is typically found in the company's balance sheet or latest financial statements.
  
**c. Calculating the Potential Funds Raised:**
- **Formula:**  
  $$
  \text{Total Funds Raised} = \text{Number of Unissued Shares} \times \text{Share Price}
  $$
  
- **Example Calculation:**  
  If the company has **1,000,000 unissued shares**, the potential funds raised would be:  
  $$
  1,000,000 \text{ shares} \times R1.80/\text{share} = R1,800,000
  $$

**d. Considerations Affecting the Fundraising Amount:**
- **Market Conditions:** Investor sentiment and overall market conditions can influence the success of the share issue and the achievable price.
- **Demand for Shares:** Higher demand might allow the company to issue shares at a premium.
- **Regulatory Approvals:** Ensuring all legal and regulatory requirements are met to facilitate a smooth issuance process.

### **2. Strategic Use of Proceeds from the Share Issue**

Once the funds are raised, it's crucial to allocate them in ways that maximize shareholder value and support the company's strategic objectives. Here are several recommended uses:

**a. Funding Expansion Projects:**
- **Capital Expenditure (CapEx):** Investing in new facilities, technology upgrades, or expanding production capacity.
- **Market Expansion:** Entering new geographical markets or launching new product lines.

**b. Reducing Debt:**
- **Debt Repayment:** Paying down existing loans or bonds to reduce interest expenses and improve the company's debt-to-equity ratio.
- **Improving Financial Stability:** Lower debt levels can enhance the company's creditworthiness and reduce financial risk.

**c. Enhancing Working Capital:**
- **Operational Efficiency:** Ensuring sufficient liquidity to manage day-to-day operations smoothly.
- **Inventory Management:** Increasing inventory levels to meet anticipated demand without delays.

**d. Research and Development (R&D):**
- **Innovation:** Investing in R&D to develop new products or improve existing ones, fostering long-term competitiveness.
- **Technological Advancements:** Staying ahead in technology to adapt to market changes and customer preferences.

**e. Shareholder Value Enhancement:**
- **Dividend Payments:** Increasing dividends to provide immediate returns to shareholders.
- **Share Buybacks:** Repurchasing shares to potentially increase the share price and earnings per share (EPS).

**f. Strategic Acquisitions:**
- **Mergers and Acquisitions (M&A):** Acquiring complementary businesses or technologies to enhance market position and capabilities.

### **Conclusion**

The exact amount the company can raise by issuing all its unissued shares hinges on the total number of shares available for issuance. Once the funds are secured, it's essential to allocate them strategically to support growth, improve financial health, and enhance shareholder value. A balanced approach considering both short-term needs and long-term strategic goals will ensure that the proceeds from the share issue are utilized effectively.
The company can raise funds by issuing all its unissued shares at the current price of 180 cents each. The exact amount depends on the number of unissued shares. For example, issuing 1,000,000 shares would raise R1,800,000. The proceeds should be used to fund expansion projects, reduce debt, enhance working capital, invest in research and development, provide dividends, or make strategic acquisitions to maximize shareholder value and support the company's growth objectives.

2.3 The company aims to issue all its unissued shares in the near future. The price of the share on the JSE is currently 180 cents on 30 June 20.2 . In your opinion, how much could they raise from this issue and what should they do with the proceeds?

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