Mgt401 GDB solution

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Opening Date and Time

June 9^th, 2011 At 12:01 A.M. (Mid-Night)

Closing Date and Time

June 13^th, 2011 At 11:59 P.M. (Mid-Night)

Note: No extra or bonus/grace period is available for attempting GDB.

Discussion Question

Wateen Telecom (Pvt.) Ltd. is a fully owned subsidiary of Abu Dhabi Group. It is recognized as one of the fastest growing ISPs (Internet Service Providers) in Pakistan from last two to three years. It has authorized capital of 25 million shares, while issued capital of 10 million shares at par value of Rs. 10 each with the same market price in year 2010. As one of the fastest growing ISPs, it needs large amount of finance to fund its telecommunication infrastructure in upcoming years.

At starting of year 2011, management and existing shareholders mutually decided in AGM (Annual General Meeting) to raise all finance through equity financing due to high cost of borrowing in Pakistan in order to meet its financial needs in telecommunication infrastructure development. It is also decided in the meeting that company will gather the finance by issuing further 10 million new shares at par value. It will issue 6 million shares to its current shareholders while remaining 4 million shares will be issued to general public at large in the open market.

Requirements

You are required to mention what specific term for the shares will be used when these will be issued to:

Current Shareholders:_____________ General Public:__________________ Note: Be specific and provide only the name of terms. Detailed information about the terms is not required.

SOLUTION:

Current Shareholders:Right Issue
General Public:Further Issue

Reference: (Lecture # 23)