Rights IssueLearning objectiveAfter completing this chapter you will be able to answer tothese questions:
What is rights issue?What are the reasons for such rights/Under what circumstances the company shall decide onrights issue?What are the hazards in case of rights issue?How the company should approach to price the rights/shares conversion ratio?What are the strategic points worth considering whileformulating the company’s strategy on rights?
Conditions to be satisfied by the firm4.
Impact on price of existing equity5.
Impact on shareholders’ wealth6.
Pricing of rights