On big board stock it depends on several factors, Citi had a very low price after dilution to raise money to pay debt. It made sense for them to RS and get their share structure at a more manageable level. Share price was another factor, plenty of liquidity in the $4 range because it attracted all of the smaller players, but big boards like bigger money which means the share price needs to be higher to get that bigger money in play.
Pinksheets like BEHL however just perform this to start the process over, they sell stories to attract money, the better story the more money. But instead of growing a business with all of the funds or shares, they often have too many hands in the pot taking pieces of growth away. For example during the PSC pump and dump, over 66% of the outstanding stock was going to individual people that were not putting the money here. Check the initial filing and it's long list of restricted shares, beneficiary owners and a whole host of "gifted" third party promoters, like PSC's 50 million or the IRs 10 million and so forth. Very little money was actually going to the business.
So they continue to expand the float and try to keep all the hands happy, unseen are the shell owners. Directors that added nothing to the business like Alex Padilla who was the shell owners son, who know their compensation packGe for providing nothing. All kinds of dead weight just leaching every bit of blood out of company, leaving nothing towards growing business. At some point the debt all piles up and litigation becomes a concern and the volume dries up. Go quiet for a bit of time hoping some will forget, sell some shares to pay some of the debt, RS with a new story line and repeat the process. That is why an RS has such a negative here in Pinkyland, it is simply a tool of fiscal mismanagement at the expense of shareholders.
