Deep discount - In the context of a rights issue, the issue of shares at a price much lower than the current trading price.In most rights issues, the new shares are priced at 10-15 per cent below the current price which is thought to be enough to ensure that existing shareholders take up the rights and buy the new shares.With a deep discount rights issue, the discount can be anything up to 50%. In August 2000 the media company Pearson announced a £1.7bn rights issue to pay for a US acquisition and priced it at a substantial discount. The reasoning was that for a rights issue of this size, and in volatile markets, the discount was necessary to ensure its success. Also, the company is estimated to have saved about £27m in underwriting fees.
Deep discount : in the context of a rights issue, the issue of shares at a price much lower than the current trading price.in most rights issues, the new shares are priced at 10-15 per cent below the current price which is thought to be enough to ensure that existing shareholders take up the rights and buy the new shares.with a deep discount rights issue, the discount can be anything up to 50%. in august 2000 the media company pearson announced a £1.7bn rights issue to pay for a us acquisition and priced it at a substantial discount. the reasoning was that for a rights issue of this size, and in volatile markets, the discount was necessary to ensure its success. also, the company is estimated to have saved about £27m in underwriting fees.
Deep discount