Chartered Semiconductor Manufacturing Limited: When Rights go Wrong: The Rights Offering of September 2002

Published 01 Jul 2005
Reference 5284
Region Asia
Length 31 page(s)
Language English

This case describes the rights offering by CSM in 2002 which was largely judged to be a failure despite the company receiving the full planned proceeds. The case takes the reader through the rights offering process, and details the "hiccups" arising from adverse market conditions as well as process mismanagement. It also allows the reader to use actual data provided by several top broker research analysts to conduct a valuation exercise. Other questions addressed include: Does price matter in a rights offering? Are investors rational? How does one gauge the value of a project?

Teaching objectives

Objectives include understanding the rights offering process and the rationale behind such a decision, including how to price a rights offering; recognising negative NPV projects and the fact that the markets are usually rational when valuing these projects; learning the role of investment banks and underwriters in fund raising exercises; and gaining an understanding of how

  • Rights offering
  • Investor relations
  • Corporate governance
  • Company valuation
  • Securities underwriting
  • Project funding