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Last week a funny thing popped up in my little "play" brokerage account (where I own <100 shares of some stocks that trade below $5.00). A second line appeared below one of my stocks with a funny name and no listed value:

enter image description here

I had no clue what this was or meant (and still don't) but a couple days later a package arrived in the mail with a prospectus about this. It is called a subscription rights offering. The language of the prospectus might as well be Aramaic. I've tried, but I don't understand it. I also don't understand why the listed subscription price in the prospectus ($0.62) is higher than the market value (as you can see above). Have I won the right to purchase stock at a higher price than the general population??

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WakeDemons3
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1 Answers1

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After a company goes public, if it wants to raise more money, then it does this by secondary public offering or rights issue.

In subscription rights issue gives the right to existing share holders to buy new shares at equal proportion. So if every one buys, they maintain the same percentage of ownership. Generally the pricing is at discount to current market price. Not sure why the price is high, unless the price for this stock fell sharply recently.

Brythan
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Dheer
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