I see alot of folks on here that don't understand what is going on:
A fully underwritten share purchase plan (SPP) is a type of capital-raising activity where a company offers its existing shareholders the opportunity to purchase additional shares at a discounted price. In a fully underwritten SPP, an underwriter (often an investment bank or financial institution) guarantees that the company will raise a certain amount of capital by purchasing any shares not taken up by shareholders.
Here’s how it works:
1. Shareholder Offer: The company offers new shares to existing shareholders at a discount to the current market price. This is usually capped to a specific dollar amount per shareholder.
2. Underwriter’s Role: If shareholders do not fully subscribe to the offered shares, the underwriter agrees to purchase the remaining shares, ensuring the company meets its capital-raising goal.
3. Risk Mitigation: The underwriting guarantees that the company will raise the intended funds, regardless of shareholder participation. This lowers the financial risk for the company and provides certainty of funding.
Fully underwritten SPPs are attractive to companies needing capital, as they provide more funding certainty compared to non-underwritten offerings, where the amount raised depends solely on shareholder demand. However, they come with an underwriting fee, paid to the underwriter for assuming this risk.
To me it's a good plan of action on part of fbr dyor this is not investment advice
(20min delay)