The way they deal with that risk these days is to decide a cut-off for "Institutions" If you take the top 20 they would cover around $24 million of the Rights issue and they would place those that were not being taken up to those that got cut back in the institutional placement. That can be achieved with only 20 phone calls. So if they made 40 phone calls then it gets even deeper probably reduces the risk by a further $10 million..
So my understanding is that brokers would be exposed to less than 19 million - top 20 (may even be as low as $10 million) and have probably shared some of their risk with those in the institutional placement. From what I have heard there are a lot that will take it - will they hold it. That's the big question.
PGC Price at posting:
76.0¢ Sentiment: None Disclosure: Held
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