Rights offering

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Rights offering

Issuance to shareholders that allows them to purchase additional shares, usually at a discount to market price. Holdings of shareholders who do not exercise 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.

Rights Offering

A popular means of raising capital by offering shareholders the opportunity to buy additional shares of the same stock at a price below the current market value.

Rights Offering

In stock, the ability of a shareholder to maintain the same percentage of ownership in a company should the company issue more stock by buying a proportional number of shares at or below the market price. This protects the investor from devaluation of his/her shares if the company decides to hold a round of financing. The purchase of this proportional number of shares usually takes place before the new issue is offered to the secondary market, and must be exercised before a certain date (known as the expiration date) if the shareholder is to maintain the same percentage of ownership. Rights offerings or issues are also called subscription rights or simply rights. See also: Anti-dilution provision.

rights offering

The distribution to existing owners of rights to purchase shares of stock as part of a new stock offering. A company uses a rights offering when it sells new shares to existing shareholders rather than selling new shares to the entire investment community. The rights are used as a means to distribute new shares to existing holders on the basis of the shares each holder already owns. See also oversubscription privilege, preemptive right.

Rights offering.

In a rights offering, also known as a subscription right, a company offers existing shareholders the opportunity to buy additional shares of company stock in proportion to the number they already own before any new shares are offered to the public.

Such an offering is usually mandated by the corporate charter.

To act on the offering, you turn over the rights you receive, typically one for each share of stock you own, and the money needed to make the purchase within the required period, often two to four weeks. The amount of money that's required is known as the subscription price.

You don't have to buy the additional shares, and you can transfer your rights to someone else if you prefer. But buying helps you maintain the same percentage of ownership you had in the company before the new shares were issued rather than having that percentage diluted.

References in periodicals archive ?
Revlon also announced that Revlon Consumer Products Corporation ("RCPC" and, together with Revlon, the "Company"), Revlon's wholly-owned operating subsidiary, will use approximately $50 million of the proceeds of the rights offering and related private placement to redeem approximately $50 million aggregate principal amount of its 8 5/8% Senior Subordinated Notes due 2008 (the "Notes"), at a redemption price of 100% of the principal amount of such Notes, plus accrued and unpaid interest up to, but not including, the redemption date.
In addition, Revlon also announced that upon receipt of the proceeds from the rights offering and related private placement, RCPC will use the remainder of such proceeds to repay approximately $50 million of indebtedness outstanding under RCPC's $160 million revolving credit facility, without any permanent reduction in that commitment, after paying fees and expenses incurred in connection with the rights offering and related private placement.
However, pursuant to its existing backstop obligation, if any shares remain following the exercise of the basic subscription privilege and the over-subscription privilege by other rights holders, MacAndrews & Forbes will backstop $75 million of the rights offering by purchasing, also in a private placement directly from Revlon, such number of remaining shares of Class A common stock offered but not purchased by other rights holders as is sufficient to ensure that the aggregate gross proceeds from (i) this rights offering, (ii) MacAndrews & Forbes' purchase of the shares that it would otherwise have been entitled to subscribe for pursuant to its basic subscription privilege and (iii) if necessary, the backstop, total $75 million.
The rights offering materials, including a prospectus supplement and the subscription rights certificates, are being mailed on or about December 18, 2006 to stockholders of record as of the Record Date.
The rights offering will be made only by means of a prospectus and a related prospectus supplement.
The rights offering described in this press release is expected to be consummated in January 2007, subject to market and other customary conditions, at which time RCPC's existing $87.
The Company will utilize the proceeds from the Rights Offering and, if applicable, the Significant Equityholders' purchase of new preferred stock or common stock under the Amended Plan, to fund required payments under the Amended Plan, to pay the expenses of the rights offering and to pay the balance of certain premiums (described below) that become due and payable on the Effective Date.
A copy of the preliminary prospectus relating to the rights offering is available from Georgeson Shareholder Communications, Inc.
In addition, the holders of SkyTerra's Series A Preferred Stock have agreed to purchase, at the subscription price in the rights offering, such number of shares of SkyTerra's non-voting common stock equal to the number of shares of common stock not subscribed for by other stockholders in the rights offering, so as to ensure that the aggregate proceeds from the rights offering are sufficient to redeem all of SkyTerra's outstanding Series A Preferred Stock at a redemption price equal to 100% of its liquidation preference (excluding accrued but unpaid dividends, which will be paid at the time of the redemption from existing cash on hand), of $119,900,700.
The cash proceeds from the rights offering will be used to redeem the Series A Preferred Stock.
The rights offering will be subject to shareholder approval of the proposed increase in the Company's authorized shares and completion of the share dividend.
The Partnership currently expects to mail a prospectus for the rights offering to common unitholders shortly after today's April 6, 2006 record date for the rights offering.