For somthing so simple, this question and solution are increadibly confusing to me, can someone explain how if a company wants to raise futher capital BY ISSUING SHARES, how a rights issue is "less complicated than issuing the shares to members of the public". If the company is making a rights issue, then they obviously already have issued share capital, therefore they can't go offering their shares to anyone since they are obliged to offer these to existing shareholders, their only option for raising more equity is through a rights issue? What the? Is anyone else confused by this? Also wouldnt a KEY advantage not mentioned be, that if the shares are issued at a sufficent discount, the rights issue is likley to raise all the additional required capital Without the need for underwriting, thus saving money?
Last edited by a moderator: Sep 6, 2009
