Its share price spiked from 99c to $1.18 on the day of the announcement, but reopened yesterday at 96c and slid 18% to close at 81c, just above its all time low of 80c.
About 368,000 shares changed hands on Wednesday, while more than 1 million were sold yesterday.
Craigs Investment Partners broker Peter McIntyre said the six-shares-for-one offer would have a "hugely dilutionary effect" and the 40c issue was a large discount.
"PGC have an elderly client base and would have to come up with a considerable amount of cash to participate, which would be beyond the means of some," he said yesterday.
However, PGC said its $237 million rights issue should give investors confidence in the company.
"Doing nothing was, and is, not an option," director Bryan Mogridge said.
The Christchurch-based company has put together a deeply discounted rights issue supported by its largest shareholder, George Kerr.
Shareholders can subscribe for six new shares for every one share held at 40c a share, which is a discount to the 84c shares were trading at yesterday, having fallen off from 99c the day before, following the announcement.
Mr McIntyre said PGC was lining up subsidiary Marac for a banking licence and also recapitalising for future growth.
PGC said it planned to retain about $50 million of the money raised for investment in existing activities, put about $35 million into Marac to position it to become a registered bank, and use another $35 million to reduce PGC parent company debt to zero.
About $13 million will be applied to pay capital-raising transaction fees, and it will partially fund about $125 million of the sale of some Marac property loans to Marac Financial Services.
The rights issue is underwritten by First NZ Capital Securities Ltd and Mr Kerr's company Pyne Family Holdings Ltd will sub-underwrite to the tune of $27.2 million.
Pyne Family Holdings, the largest shareholder with a 10% holding, will take up its entitlement of 59.2 million shares for $23.68 million.
Other brokers spoken to by NZPA said the rights issue would be attractive to new shareholders, but diluted existing shareholders who trade their rights.
The company has been criticised for poor disclosure and related party transactions, including those involving its finance company, subsidiary Marac.
It also owns 100% of Perpetual Trust, a 21% shareholding in PGG Wrightson and 100% of funds management company Perpetual Asset Management.
PGG Wrightson is itself expected to undertake a capital raising and PGC did not rule out taking part in it.
After the PGC rights issue is completed the company intends to raise between $15 million and $30 million via a separate placement to institutions and investors, including to sub-underwriters.
Pyne Family Holdings is entitled to participate in the placement, but must pay the higher of the bookbuild price, or 49c a share.
This could increase Mr Kerr's shareholding, but he cannot go over 20%.
The company will also launch a share purchase plan under which shareholders can apply for $5000 worth of additional shares, which is expected to raise about $3 million.
The company said Marac's banking syndicate had waived any right of review that arose out of Marac's Standard and Poor's credit rating downgrade in August to BB+ with a negative outlook, pushing it into the "non investment" junk grading.
The capital-raising plan came after the company registered a loss of $54.35 million for the year to June 30, a year after a record $44.76 million profit.
Marac stopped lending to property developments earlier this year following impairments on property loans and now focuses on plant and equipment and vehicle financing.
