Question
Mandalorian Bail Bonds Inc. will conduct a rights issue in order to raise $234.0 million in funding to expand into other galaxies. The firm is
Mandalorian Bail Bonds Inc. will conduct a rights issue in order to raise $234.0 million in funding to expand into other galaxies. The firm is currently valued at $2106.000 million with 60.00 million shares outstanding. The firm considers 2 alternative plans:
Scenario 1: The firm wants to set the subscription price discount from the pre-issue price to 5.0%. What is the number of shares required to receive 1 right (non-integer numbers are likely; report 3 decimals) in this case? What will be the value of a right?
Scenario 2: The firm conducts a 8:1 rights issue. Assuming all rights will be exercised (and ignoring issuance costs), what is the lowest subscription price the company can offer and still raise the necessary funds? What percentage discount from the current price does the subscription price represent (enter a positive number)? % What will be the share price after the completed rights issue in this case?
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