Rights issue

RECENT NEWS
Channel News Asia  Aug 19  Comment 
In a press conference in Hong Kong, the lender said it was planning to raise S$3.3 billion, by issuing about 440 million new shares to existing shareholders. 
Wall Street Journal  Aug 18  Comment 
Singapore's Oversea-Chinese Banking plans to raise 3.32 billion Singapore dollars (US$2.7 billion) in a rights issue that will partly finance its recent multibillion-dollar purchase of a Hong Kong bank.
Financial Times  Aug 18  Comment 
Channel News Asia  Aug 18  Comment 
The rights issue follows the bank’s recent acquisition of Hong Kong’s Wing Hang Bank in a deal worth about US$4.95 billion.
The Hindu Business Line  Aug 15  Comment 
Proceeds will be utilised to increase working capital
Reuters  Aug 14  Comment 
Telekom Austria's shareholders approved a 1 billion-euro ($1.34 billion) rights issue on Thursday backed by the company's two major owners, America Movil and Austria.
The Straits Times  Aug 12  Comment 
August 13, 2014 1:14 AM AN OCBC Bank rights issue of about $3 billion or more is likely on the cards to help fund its purchase of Wing Hang Bank even though a share placement would be easier, analysts have said.
WA Business News  Aug 6  Comment 
West Perth-based coal miner Continental Coal has announced a non-renounceable $35.1 million rights issue as part of a recapitalization and restructure.
The Australian  Aug 5  Comment 
RECRUITERS Bluestone Global has gone into administration after shareholders failed to back a $4m rights issue.
Reuters  Aug 1  Comment 
A billion-euro ($1.34 billion) rights issue by Telekom Austria is likely to happen soon after the company gains approval from its shareholders later this month, Telekom...
The Economic Times  Jul 29  Comment 
"Total proceeds from the issue of equity shares and class B shares would aggregate up to Rs 1,600 crore," Future Retail said in the document.




RELATED WIKI ARTICLES

Related Articles

 
TOP CONTRIBUTORS

Rights Issue

Rights Issue is a secondary capital raising strategy by the company. It gives it's stockholders an option say 1:1 (i.e. one rights issued per stock held) for the outstanding common stocks.

Ex. Say an investor has 100 shares of a company at Rs. 10 per share with a total investment of Rs. 1000. The company's brokers informs him about the option as 1:1rights issued at Rs. 8 per share. The investor exercises the option and now get's 100 shares @ Rs. 8 each. Thus his total investment is now 8*100 + 1000 = Rs. 1800 with 100+100 = 200 shares. Average price of share = 1800/200 = Rs. 9.

If all the investors avail the option than the market price of the share would come down to Rs. 9 per share and the market cap of company for a total initial outstanding common shares of 1 million (now 2 million) would be Rs. 18 million from previous market cap of Rs. 10 million.

The EPS of the company halves if the capital raised is not used as the number of shares has doubled. If the capital raised is reinvested properly and the EBIT increases than the EPS also changes accordingly.

Investor use

As used by the investor, these are an offering of shares issued at a special price by a company to its existing shareholders in proportion to their holding of old shares. [1]

Investors in common stock occasionally receive rights offerings to purchase additional common stock below the existing market price. The stock rights were probably issued to satisfy the investor’s preemptive right to maintain an existing level of ownership in the company. Rights are issued below the existing market price to encourage the exercise of the rights. The rights are separate having their own markets. [2]

From "morally correct," "just, good, fair, proper, fitting, straight," to put right" "just, righteous, wise "honest, morally upright "just claim" "in a proper manner" [1]

References

  1. ‪Wall Street words: an A to Z guide to investment terms for today's investor‬ By David Logan Scott pg318
  2. Wiley CPA Exam Review 2010: Financial Accounting and Reporting by Patrick R. Delaney and O. Ray Whittington ISBN-10: 0470453516 pg585
Wikinvest © 2006, 2007, 2008, 2009, 2010, 2011, 2012. Use of this site is subject to express Terms of Service, Privacy Policy, and Disclaimer. By continuing past this page, you agree to abide by these terms. Any information provided by Wikinvest, including but not limited to company data, competitors, business analysis, market share, sales revenues and other operating metrics, earnings call analysis, conference call transcripts, industry information, or price targets should not be construed as research, trading tips or recommendations, or investment advice and is provided with no warrants as to its accuracy. Stock market data, including US and International equity symbols, stock quotes, share prices, earnings ratios, and other fundamental data is provided by data partners. Stock market quotes delayed at least 15 minutes for NASDAQ, 20 mins for NYSE and AMEX. Market data by Xignite. See data providers for more details. Company names, products, services and branding cited herein may be trademarks or registered trademarks of their respective owners. The use of trademarks or service marks of another is not a representation that the other is affiliated with, sponsors, is sponsored by, endorses, or is endorsed by Wikinvest.
Powered by MediaWiki