The stock was down .31 after hours on this announcement. So much for the healthy premium.
Even though the funds will be used to purchase additional gold bullion and add a little cushion to the cash on hand, there is generally some game playing done by the underwriters who like to hedge (some might say 'front run') their over allotments.
PRESS RELEASE: Sprott Physical Gold Trust Announces Follow-on Offering of Trust Units
Thu Sep 06 16:04:24 2012 EDT
TORONTO, ONTARIO--(Marketwire - Sept. 6, 2012) - Sprott Physical Gold Trust (the "Trust") (NYSE:PHYS)(TSX:PHY.U), a trust created to invest and hold substantially all of its assets in physical gold bullion and managed by Sprott Asset Management LP, announced today that it has launched a follow-on offering (the "Offering") of transferable, redeemable units of the Trust ("Units").
The Trust will use the net proceeds of the Offering to acquire physical gold bullion in accordance with the Trust's objective and subject to the Trust's investment and operating restrictions described in the prospectus related to the Offering. Under the trust agreement governing the Trust, the net proceeds of the Offering per unit must be not less than 100% of the most recently calculated net asset value per Unit of the Trust prior to, or upon determination of, pricing of the Offering.
The Units are listed on NYSE Arca and the Toronto Stock Exchange under the symbols "PHYS" and "PHY.U", respectively. The Offering will be made simultaneously in the United States and Canada by underwriters led by Morgan Stanley and RBC Capital Markets in the United States and RBC Capital Markets and Morgan Stanley in Canada...