Replies to post #13997 on BioNitrogen Holdings Corp. (BIONQ)

[TFletcher]

Hi, peafunke, A "Rights Offering" provides existing shareholders the right to purchase newly issued shares... before the market.
This does dilute share value... but raises funds from us instead of from a new source.
A new source would probably insist upon cancelling the existing shares... us!
Just an example:
Hypothetically, they could double the outstanding shares.
The new shares are at a price where the company nets 3 cents per share.
They would raise over $13 million... from us.
That would payoff the debts, fund the EPC, and provide much-needed operating capital.
Existing shareholders who don't have money to buy the new issue could sell their "right" and cash out.
Granted, I've over-simplified this, but that's the basic process.
It's been done many times.