R.U.Ready Ltd wishes to raise $20 million.If the subscription price is $5, the current share price is $7.50, and there are 8 million shares outstanding, what will be the terms of the rights issue?

Question

Quizplus · Accepted Answer

To raise $20 million at a subscription price of $5 per share, R.U.Ready Ltd needs to issue 4 million new shares ($20 million / $5 per share). With 8 million shares currently outstanding, a 1-for-2 issue means for every 2 shares owned, a shareholder can buy 1 new share, which matches the requirement to issue 4 million new shares.

RUReady Ltd Wishes to Raise $20 Million