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Dear Sir,
When calculating the revised book value of equity I cannot fully understand why we add $80M to 140M equity and not $15M (new number of share *$1 nominal value)
I think $80M is the nominal value of the loan and not the nominal value of the share.
Thanks
Gabriella
They are raising $90M by a rights issue, so the total book value of the equity (share capital plus reserves) goes up by $90M.
The make a loss of $10M on redeeming the bonds.
So the net increase in equity is 90 – 10 = $80M.
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