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Rights offering

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Definition of Rights offering

Rights Offering Image 1

Rights offering

Issuance of "rights" to current shareholders allowing them to purchase additional shares,
usually at a discount to market price. Shareholders who do not exercise these rights are usually diluted by the
offering. rights are often transferable, allowing the holder to sell them on the open market to others who may
wish to exercise them. rights offerings are particularly common to closed end funds, which cannot otherwise
issue additional common stock.



Related Terms:

Ex-rights

In connection with a rights offering, shares of stock that are trading without the rights attached.


Standby fee

Amount paid to an underwriter who agrees to purchase any stock that is not subscribed to the
public investor in a rights offering.


Subscription price

Price that the existing shareholders are allowed to pay for a share of stock in a rights offering.


Take-up fee

A fee paid to an underwriter in connection with an underwritten rights offering or an
underwritten forced conversion as compensation for each share of common stock he underwriter obtains and
must resell upon the exercise of rights or conversion of bonds.


Appraisal rights

A right of shareholders in a merger to demand the payment of a fair price for their shares, as
determined independently.



Competitive offering

An offering of securities through competitive bidding.


Cum rights

With rights.


Rights Offering Image 2

Dividend rights

A shareholders' rights to receive per-share dividends identical to those other shareholders receive.


Dual syndicate equity offering

An international equity placement where the offering is split into two
tranches - domestic and foreign - and each tranche is handled by a separate lead manager.


Ex-rights date

The date on which a share of common stock begins trading ex-rights.


Initial Public Offering

A firms first offering of its shares to the investment public, after registration requirements of the various securities regulators have been met.


Initial public offering (IPO)

A company's first sale of stock to the public. Securities offered in an IPO are
often, but not always, those of young, small companies seeking outside equity capital and a public market for
their stock. Investors purchasing stock in IPOs generally must be prepared to accept very large risks for the
possibility of large gains. IPO's by investment companies (closed-end funds) usually contain underwriting
fees which represent a load to buyers.


initial public offering (IPO)

First offering of stock to the general public.


Liquidation rights

The rights of a firm's securityholders in the event the firm liquidates.


Negotiated offering

An offering of securities for which the terms, including underwriters' compensation,
have been negotiated between the issuer and the underwriters.


Offering memorandum

A document that outlines the terms of securities to be offered in a private placement.


Rights Offering Image 3

Offering Memorandum

A "prosperous-like" document providing detailed descriptions of a company's past, present, and prospective business operations. It is normally prepared for the use of potential purchasers of securities offered under the seed capital or private placement prospectus exemptions.


Primary offering

A firm selling some of its own newly issued shares to investors.



Property rights

rights of individuals and companies to own and utilize property as they see fit and to receive
the stream of income that their property generates.


Public offering

The sale of registered securities by the issuer (or the underwriters acting in the interests of the
issuer) in the public market. Also called public issue.


Public offering

The sale of new securities to the investing public.


Reoffering yield

In a purchase and sale, the yield to maturity at which the underwriter offers to sell the bonds
to investors.


rights issue

Issue of securities offered only to current stockholders.


Rights-on

Shares trading with rights attached to them.


seasoned offering

Sale of securities by a firm that is already publicly traded.


Special drawing rights (SDR)

A form of international reserve assets, created by the IMF in 1967, whose
value is based on a portfolio of widely used currencies.


Uniformed Services Employment and Reemployment Rights Act of 1994

A federal act that minimizes the impact on people serving in the Armed Forces
when they return to civilian employment by avoiding discrimination and increasing
their employment opportunities.


Rights Offering Image 4

Voting rights

The right to vote on matters that are put to a vote of security holders. For example the right to
vote for directors.



With rights

Purchase of shares in which the buyer is entitled to the rights to buy shares in the company's
rights issue.



 

 

 

 

 

 

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