Apparently not shareholders!
HBOS PLC said Monday that only 8.29% of shareholders subscribed to its £4 billion ($7.99 billion) rights issue, a result that could discourage underwriters from taking on future financial services capital increases.
The British bank said underwriters Morgan Stanley and Allianz SE's Dresdner Bank AG would now have to find subscribers for the balance of its shares, worth about £3.78 billion, by Tuesday afternoon or add them to their own balance sheets.
Don't buy the story that $7.5 billion worth of new shares are now going to be added to Allianz or Morgan Stanley's balance until they can offload them (rump) to someone else. They would have hedged (sub-underwritten) a portion of their underwriting commitment for a fee, and that party would of laid off the short in the marketplace, which took out the difference that originally existed in the rights offering and the share price of HBOS .
And Morgan Stanley, could have shorted other bank stocks as a "hedge" against their commitment.
Why do you think market makers need an exemption for the short sale rule?
So they can short their competitors!
It's not a story, but its a headline.