Another Finance question please HELP?

Question

What are rights offerings and what are they used for?

Answer 1

Rights offerings typically provide an issuer’s existing shareholders the opportunity to purchase a pro rata portion of additional shares at a specific price per share, often at a discount to the current market price. Because a rights offering is extended to all existing shareholders on a pro rata basis, there is no dilutive effect to shareholders who exercise the rights issued to them. Shareholders typically have 15 to 20 days from the designated record date in which to exercise their rights and forward payment to an escrow agent.

They are exempt from the shareholder voting requirements imposed by the national securities exchanges in connection with issuances of common stock representing 20% or more of the voting power outstanding before issuance because they are deemed to constitute “public offerings for cash.”

Read on:  http://www.dechert.com/library/Corporate...