Long time lurker, first time poster.
It's true the subscription right may be the same or lower then the current market price for the stock. However, if a right holder sees any value in adding to their position, they would be wise to consider exercising the right - as opposed to buying shares on the open market (at least speaking from the perspective of a US Taxpayer).
Check out Section 1202 of the Internal Revenue Code - "Partial Exclusion from Gain for Certain Small Business Stock"
There are many requirements needed to qualify for this exclusion. But the biggest/hardest one, in my opinion, is having a position that qualifies as "original issue". Buying on the secondary market is not "original issue", but a Rights offering, sounds like an "original issuance" to me. It's not often you can get an opportunity to acquire an "Original Issue" stock, so it may be worthwhile to pay a premium on the exercise (if there is a premium at all) to potentially qualify for this gain exclusion in the future.
I'm not an investment advisor/1202 expert, just a normal guy who invests in stocks. So you obviously have to consult your own advisory team/do your own due diligence. But I just wanted to share this to provide some food for thought.
Who knows. Maybe Chan knows it does qualify and he keeps trying to give the stockholders an opportunity to get in (continually re-opening/extending the rights offerings)?? Wishful thinking most likely, but maybe it's not...
