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Thanks for your response.

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MrT11   Thursday, 08/16/18 01:46:10 PM
Re: Phaedrus77 post# 570
Post # of 625 
Thanks for your response.
I don't like the idea of dilution, not saying your wrong though.
I think if Warren would have come out and said this lease contract is worth x amount and will take x # of years to fill and we have x amount of new business in the pipeline and pump just a bit we may be at $1 then say an offering only to pay down debt. Remember when he did that 15 page work up showing the future growth ( I'm guessing it was for MCC) But something like that now would be a good idea. JMO


Types of Rights Offerings
There are two general types of rights offerings: direct rights offerings and insured/standby rights offerings. In direct rights offerings, there are no standby/backstop purchasers (purchasers willing to purchase unexercised rights) as the issuer only sells the number of exercised shares. If not subscribed properly, the issuer may be undercapitalized. Insured/standby rights offerings, usually the more expensive type, allow third-parties/backstop purchasers (e.g. investment banks) to purchase unexercised rights. The backstop purchasers agree to the purchase prior to the rights offering. This type of agreement ensures the issuing company that their capital requirements will be met.
Rights Offering Advantages
Companies generally offer rights when they need to raise money. Examples include when there is a need to pay off debt, purchase equipment, or acquire another company. In some cases, a company may use a rights offering to raise money when there are no other viable financing alternatives. Other significant benefits of a rights offering are that the issuing company can bypass underwriting fees, there is no shareholder approval needed, and market interest in the issuer's common stock generally peaks. For existing shareholders, rights offerings present the opportunity to purchase additional shares at a discount.
Rights Offering Disadvantages
Sometimes, rights offerings present disadvantages to the issuing company and existing shareholders. Shareholders may disapprove because of their concern with dilution. The offering may result in more concentrated investor positions. The issuing company, in an attempt to raise capital, may find that additional required filings and procedures associated with the rights offering are too costly and time-consuming; the costs of the rights offering may outweigh the benefits (cost-benefit principle).




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