Fannie Mae-No Politics (FNMA)

[obiterdictum]

First, please read these articles about a rights offering or a rights issue.

http://www.investopedia.com/articles/stocks/05/062905.asp
http://www.sharesexplained.com/rights-issue-of-shares
http://www.fool.com/investing/general/2007/07/12/fight-for-your-rights-offering.aspx

if the deal goes down, and it most likely will not, your 5000 shares of common stock will remain. The market value of those 5000 shares will change as it always does according to the conditions and activity in the marketplace. The price per share may go up or go down or remain the same.

In the Berkowitz proposal, Berkowitz may consider but has not yet committed to giving a limited opportunity to GSE common shareholders to participate in a rights offering so that you can purchase rights shares at a specific discounted price during a specific period of time in a certain amount proportional to your current shares of the new companies that he proposes.

You are not given rights shares. You must pay for them at a discounted price before they are offered on the open market. That money you paid than goes into the new companies as capital and in return you get common shares in the new companies.

The full detail of the rights offering is not given in the proposal, so I cannot say anymore than this. For example, does your 5000 shares move to the new company like the participating preferred shares do as part of the restricted capital? The answer cannot be given to that because Berkowitz is still considering what to do and has not made it clear if there will be be a conversion of GSE stockholders holding to the new companies stock and there is no prospectus for a rights offering to common shareholders.

So plug in the your information into the examples given in the articles abd your understanding should be well formed.