The following is an extract from a letter sent on 22 February 2024 by Westshore Ltd to its shareholders in relation to a rights issue by the company.

Required 

A client who holds shares in Westshore Ltd has approached you in relation to this letter. She requires you to explain the nature of a renounceable rights issue and who will receive shares in Westshore Ltd under the proposed rights issue. Write a report to your client providing the requested advice.

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Dear shareholder Renounceable rights issue-information for shareholders On 22 February 2024 Westshore Ltd (the Company) announced to ASX that it was to undertake a renounceable rights issue of new ordinary shares to eligible shareholders. Renounceable rights issue It is proposed that the Company issue approximately 1 500 000 000 new ordinary shares at a price of $0.005 per new ordinary share to acquire three new ordinary shares for every one share held at the record date of 28 February 2024. The rights issue is partially underwritten to a value of $1 750 000 by a number of convertible noteholders and lenders who have agreed that the face value of the convertible notes and loans they hold can be offset by them subscribing for any shortfall shares under the offer. Any funds raised under the rights issue that are not applied to the repayment of convertible notes or loan funds will be applied towards the costs of the offer and the Company's working capital to support its focus on the development and distribution of some of the Company's products in South-East Asian markets into which the Company has recently expanded. These products include dairy and meat products from the Company's production outlets, particularly in Western Australia and the Northern Territory. Because of problems with the quality of such products currently available in South-East Asia it is believed that there is significant potential for the Company to expand its market share of the products in that region. Applications In the event this rights issue is not fully subscribed, the directors have determined to offer eligible shareholders the right to apply for new shares arising out of any shortfall. The shortfall facility will be made available to eligible shareholders prior to being made available to the underwriters. The number of additional new shares available will depend on the size of the shortfall. Eligible shareholders will not be allocated additional new shares under the shortfall facility if the effect of doing so would result in that shareholder obtaining voting power in the Company in excess of 20% or if that shareholder already holds voting power in excess of 20%, increasing that voting power. If there is still a shortfall after all applications for additional new shares from eligible shareholders have been satisfied in full (subject to the Corporations Act), the directors will call on the underwriters' commitments. To the extent that there remains any shortfall following the issue of additional new shares to the underwriters the directors reserve the right pursuant to the Corporations Act and Listing Rule 7.2 (Exception 3) to place the shortfall at an issue price per new share of not less than $0.005 within 3 months of the close of the offer on normal commercial terms. The entitlement and acceptance form will be dispatched together with the offer document. Eligible shareholders must complete the entitlement and acceptance form in order to take up their entitlements and to apply for shortfall securities. Entitlement and acceptance forms must be properly completed and received by the Company's share registry no later than 5.00 pm (AEST) on 14 March 2024 in order for applicants to be issued new ordinary shares and shortfall securities.