By PAUL PANCKHURST
Tranz Rail shares closed yesterday at 95c - nearly 9 per cent below their theoretical ex-rights price of $1.04.
One analyst described the selling as "fairly aggressive".
The company is raising $66 million in a five-for-seven renounceable rights issue priced at 75c a share.
Its share price closed at
$1.25 on Friday and the rights started trading yesterday. On a mathematical basis, the effect of the issue should have been a price of $1.04.
Analysts said weakness - and volatility - could be expected until the issue closed on December 13.
"It's going to be a volatile trade between now and then and you would expect it to lean towards the selling side," said one.
The 88 million new shares will start trading on December 16.
The issue is to pay off debt and provide extra security to the owners of the interisland Aratere ferry.
It is crucial to Tranz Rail's financial restructuring - and was nearly killed by last week's standoff with one of its bankers, Citibank.
To settle the dispute, Tranz Rail closed US$81 million ($162 million) in foreign exchange hedging contracts linked to US dollar lease payments for the Aratere running through to 2011.
