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Gold/Mining/Energy : Central Fund of Canada (CEF)
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To: Dundee Maples who wrote ()11/13/1998 7:57:00 PM
From: dynamitehandler  Read Replies (1) of 16
 
New rights issue gives CEF holders opportunity to increase holdings at a price of $4/sh for the next year. Here's the press release:
===========================================
PRESS RELEASE
CENTRAL FUND OF CANADA LIMITED
ANNOUNCES A
RIGHTS AND WARRANTS OFFERING

Central Fund of Canada Limited announces that its Board of Directors has approved a Rights and Warrants Offering yesterday. The Offering provides for subscriptions for up to 3 additional Class A shares for every 4 shares presently held by shareholders in three
subscription steps of one Class A share each.

The Offering is as follows:

1. Central Fund of Canada Limited will issue one transferable Right for each Class A and Common share presently outstanding to shareholders of the Company of record on November 12, 1998.

2. Four Rights and U.S. $4.00 will entitle a holder to subscribe for one A Unit consisting of one Class A share and one transferable Series 1 Warrant up to the expiry of the Rights at 5:00 p.m. Eastern Standard Time on December 15, 1998.

3. One Series 1 Warrant and U.S. $4.00 will entitle a holder to subscribe for one B Unit consisting of one Class A share and one transferable Series 2 Warrant during the period from May 3,1999 to 5:00 p.m. Eastern Daylight Savings Time on May 26, 1999.

4. One Series 2 Warrant and U.S. $4.00 will entitle a holder to subscribe for one Class A share during the period from November 1, 1999 to 5:00 p.m. Eastern Standard Time on November
24, 1999.

The Class A shares of Central Fund are listed as CEF on the American Stock Exchange and as CEF.A on The Toronto Stock Exchange. Conditional approval has been given for listing Rights and Warrants on said exchanges. A commission of U.S. ten cents per Class A share will be paid to those brokers and dealers in Canada and The United States assisting Rights and Warrants holders in exercising their bscriptions.

Central Fund of Canada Limited is a Gold and Silver bullion holding company which presently employs over 99% of its assets in bullion in the ratio of one ounce of Gold to fifty ounces of silver. Central Fund is known as "The Sound Monetary Fund".

For further information, please contact J.C. Stefan Spicer, Vice
President:
Telephone ( 905 ) 648-7878, Fax (905) 648-5422
===================================

My question is: where do these new shares come from? Isn't this a closed end fund? Is this going to dilute the value of the shares outstanding? The benefit of the whole plan lies in guessing whether the fund shares are going to rise above $4 within the next year. That guess becomes a lot more difficult if you have to take share dilution into account.
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