The dark art of capital raisings
Why is it that during the great re-equitisation of corporate Australia in 2009 there was so much criticism of capital raisings that were not pro rata? Or if pro rata, were not renounceable? Countless articles were written on the subject and directors were pushed in every direction – damned if they did and damned if they didn’t.
If an American corporation announced a rights offering, its stockholders and the broader market would be worried.
It would have nothing to do with dilution, coercion or short-selling risks. They would simply be worried that the company had no other avenues to raise capital. That is the message that a rights offering sends in the US, and the offerings are extremely rare.
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