RBS Share offer

[kentmotorcompany]

As an existing shareholder, I have today recieved an open offer to "apply for 3 New Shares for every 7 Existing Shares at 31.75 pence per New Share"

At the time of writing RBS shares are trading for 26.6p. Why would anyone apply for more shares at 31.75p?

I'm very new at share dealing, so I'm sure I must be missing something here. Could someone explain what it is please.

[kentmotorcompany]

UncappedTag said:

kentmotorcompany said:

As an existing shareholder, I have today recieved an open offer to "apply for 3 New Shares for every 7 Existing Shares at 31.75 pence per New Share"

At the time of writing RBS shares are trading for 26.6p. Why would anyone apply for more shares at 31.75p?

I'm very new at share dealing, so I'm sure I must be missing something here. Could someone explain what it is please.

http://moneyterms.co.uk/rights-issue/

Thanks. Sort of explains most of it, except why the price is so high. I cant see many people taking up these offers.