Globalstar Inc (GSAT)

[DDHOUND]

A rights offering occurs when a company issues rights, at no cost, to its shareholders to purchase additional shares of the company. It is, in essence, a cash call to existing shareholders providing them with the opportunity to purchase a pro rata portion of additional shares at a specified per share price typically set below the market price.

"A rights offering may be effected by means of a prospectus offering in compliance with applicable securities laws and, if the shares of the company are publicly traded, in compliance with the policies of the applicable stock exchange. Several jurisdictions also have securities laws that provide for a prospectus exemption for rights offerings, in which case the rights offering is made pursuant to a rights offering circular.

In essence, a rights offering is similar to a warrant or an option distribution because it enables the holder to acquire another security. However, a rights offering differs from a warrant or an option distribution in that the right can only be granted to an existing shareholder. Rights are typically transferable and can be transferred at cost to third parties but cannot be granted to investors who are not shareholders."