PNG rights offering - determining priceI know essentially nothing about the details of rights offerings, but it is interesting from an optimization perspective:
- If the rights offering price is too low, then shareholders may engage in action as it certainly is far from unlocking value.
- If the rights offering price is too high, not enough shareholders will exercise their rights, forcing a relatively large financial backing from somewhere.
So essentially, what is the lowest price they can get away with to avoid either of the two above outcomes?
My best guess is a price set modestly above book value. But that's just pure speculation.