2.2 cents is a large discount, and it should avoid a...

2.2 cents is a large discount, and it should avoid a shortfall.

However, let's say I wanted to buy 100k shares at 5 cents and then take advantage of the rights issue. That'll give me 107692 shares with an average purchase price of then 4.8 cents. The advantage here is rather small, in my view. If I was an existing holder, I would be tempted to sell some on the market before the rights issue closes because that'll allow me to pick up some cheap shares at 2.2 while selling some at the current inflated price and keeping my previous holding. At the same time, the market price would likely suffer, so I could pick up the shares I sold cheaper as well. What is your prediction for the market price once trading opens?

http://www.takeovers.gov.au/content/DisplayDoc.aspx?doc=guidance_notes/current/017.htm