This underwriter is underwater and holding isn't usually part of their investment plan so my question is what are they going to do? Dumping that amount of shares on the market will push them further under as we have seen not long ago. They cant sell to the Chinese without FIRB approval so I think there will be a glut of options for sale.
Now for the but! The Chinese will take their entitlements to maintain their strong position in the company so what happens when there is a short fall? Their percentage in the company increases! As far as I'm aware the Chinese do not have to seek FIRB approval to take their entitlement including the attaching options but do to increase their percentage holding so this sort of circumnavigates this issue, Also as far as I'm aware they don't have to apply for FIRB approval to purchase options in the company but imagine they would if they went to convert above the amount they were originally entitled to.
So what happens if the Chinese buy all the available options on market and let the excess of the original amount they are entitled to lapse? Their percentage in the company increases! Anyone now the FIRB rules on this scenario?
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