Definition
A rights offering (rights issue) gives existing shareholders the right, but not obligation, to purchase additional shares at a discount to the current market price, proportional to their current holdings. Rights are typically transferable and can be sold if the holder doesn't want to participate. Companies use rights offerings to raise capital while giving existing shareholders the opportunity to maintain their ownership percentage and benefit from the discounted price.
Formula
Example
A company offers 1 new share for every 4 owned at $8 (current price $12). If you own 100 shares, you can buy 25 new shares at $8 each, gaining an immediate paper profit on the discount.
FAQ
What is Rights Offering?
An offering allowing existing shareholders to buy additional shares at a discount.
How do you calculate Rights Offering?
A common formula for Rights Offering is: 理论除权价格 = (原价 x 原股数 + 认购价 x 新股数) / 总股数; 认股权价值 = 理论除权价格 - 认购价
Why is Rights Offering important?
Rights Offering helps investors evaluate corporate actions and make more informed decisions.