The Nationwide Grid (LSE: NG.) share price has slumped greater than 10% on the time of writing on Friday.

It’s all about FY outcomes the day earlier than, on 23 Could. And the truth that the announcement included the shock information of a brand new £7bn fairness subject.

It’s meant to fund the agency’s new progress plans. CEO John Pettigrew stated: “We will be investing £60 billion in the five years to the end of March 2029 – that’s nearly double the level of investment of the past five years.“

The shares were already down 11% on results day. So as I write, we’re looking at a big double-digit crash in less than two days. Ouch!

Dividend cut!

It’s not the kind of company I expect to surprise the market like this. In fact, I’ve always seen it as a bit of a dull plodder.

It just pays steady dividends, year after year, with a clear vision of its future earnings and costs. Well, not this time. There’s a horrible word in this latest update, “rebased”.

The corporate stated: “We are going to preserve a progressive stage of complete dividend rising from the present stage that the Board has advisable for the yr to March 2024. This equates to a complete DPS (dividend per share) of 58.52p/share for 2023/24 which can then be rebased given the elevated variety of shares following the rights Subject.“

So the identical complete dividend money in future years, however divided by the enlarged variety of shares?

Low-cost shares

This information may need shareholders tearing their hair out. However please don’t, as the brand new rights subject feels like a candy deal to me.

Current shareholders may have the suitable to purchase seven new shares for each 24 they presently personal. And, anticipate it… they’ll solely should pay 645p every for them.

That’s a full 43% under the closing price on Wednesday, the day earlier than the information broke. And it’s nonetheless a reduction of 28% on the price as I write.

purchase?

Is the Nationwide Grid share price more likely to fall as little as the brand new rights price? The brand new subject is geared toward elevating £7bn of recent capital.

And the market cap, even after the two-day share price slide, remains to be at £33bn. If the brand new subject actually does assist develop future earnings, then I reckon it may present a long-term market cap enhance.

If something, I reckon the market has overreacted. And I might be tempted to purchase some on the new market price, even with out having the ability to take up the brand new provide.

Valuation

The primary downside for traders now could be that every one valuation measures, hopes and forecasts are up within the air. These fundamentals, for such a boringly predictable firm? Meaningless. And that’s the massive threat.

We’ll have to attend till the mud settles earlier than we will get a deal with on the brand new worth of the inventory. But when I owned any Nationwide Grid shares, I reckon I’d snap up the rights provide.

And what a strategy to finish the week, with Nationwide Grid all of the sudden essentially the most thrilling inventory on the FTSE 100!