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Rights issues presume that the offering company is actually solvent.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sun Jun 20th, 2010 at 04:24:11 PM EST
[ Parent ]
No they don't. The new capital might very well be used to plug the holes in the balance sheet of an insolvent company.

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Sun Jun 20th, 2010 at 04:29:30 PM EST
[ Parent ]
And the new capital would love to do that for what precise reason, again?

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sun Jun 20th, 2010 at 05:09:59 PM EST
[ Parent ]
Because the new capital, which might or might not be supplied by the old shareholders, will get shares at very preferntial terms, ie any old shareholder who doesn't take part in the rights issue will more or less be wiped out.

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Sun Jun 20th, 2010 at 05:30:15 PM EST
[ Parent ]

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