Explain why you recommend this discounted price rather than offering the
shares at the current market price.
Kiwi Airlines is looking to expand its business post-pandemic and is
contemplating a renounceable rights issue to raise funds to accomplish this. Kiwi
Airlines currently has 75 million shares outstanding with a market value of $5.00
each. Kiwi Airlines needs to raise $100 million and has contracted you to design
a rights issue to accomplish this.
You recommend that the offer price for the new shares is $4.00 per share.