Rights Offerings

Summary

This practice note discusses rights offerings, including their advantages and disadvantages, structuring issues, and key considerations in conducting a rights offering. A rights offering is a securities offering in which an issuer issues "rights" to its existing shareholders to purchase additional company issuer on a pro rata basis, usually at a discount to the market price of the shares before the offering begins. The rights are issued for no consideration and typically provide for a short exercise period of 16 to 30 (or 45) days. A rights offering may offer a company certain advantages over other forms of securities offerings, including the ability to raise capital without diluting the ownership interests of its existing shareholders.