Rights Offering (Noun)
Meaning
An offering of common stock to existing shareholders who hold subscription rights or pre-emptive rights that entitle them to buy newly issued shares at a discount from the price at which they will be offered to the public later; "the investment banker who handles a rights offering usually agrees to buy any shares not bought by shareholders".
Classification
Nouns denoting communicative processes and contents.
Examples
- A rights offering is an opportunity for shareholders to purchase additional shares at a discounted price before they are made available to the general public.
- The company decided to proceed with a rights offering to raise capital without diluting the ownership stakes of existing shareholders.
- This type of financing strategy allows existing shareholders to maintain their proportional ownership and prevent dilution of their shares through a rights offering.
- Investors need to weigh the benefits of participating in a rights offering, taking into account the discounted price and the potential for long-term growth.
- Typically, companies undertake a rights offering during times of financial distress, and shareholders can exercise their pre-emptive rights to purchase shares at a lower price.