Burt,
This issue here is one of "control". You see, typically a rights issue with a lower price will attract greater "participation" from shareholders and vice versa.
Therefore by inappropriately pricing at an "inflated price", a potential sub-underwriter can achieve a greater take-up in any potential shortfall..
A failure to adequately grasp this concept is why PRC is still viewed as at attractive alternative by some shareholders. Many shareholders think PRC are actually doing the company a favor by potentially proposing a rights issue at a price that does not necessarily represent market value - A shareholder must look deeper into the underlying motive of pricing.. Why price it so high? Oh, so you can get more shortfall.. aha, I get it..
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