It is unlclear to me whether the underwritten $50m is for the first or last $50m out of the $85m. I suspect if only $50m of the rights is taken up, the underwriter walks away with 5% ($2.5m)and does not need to buy any shares. A second underwriter must therefore be prepared to purchase all $15m worth of shares and options at the $2.50 per right. At a share price of around $2.00 I can not see a second undrewriter to come along.
WM would have done better to sell the rights at $2.00 per share and not underwrite them - saving the shareholders 5%.
CDU Price at posting:
$2.02 Sentiment: LT Buy Disclosure: Held
