Rights Offering

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Rights Offering

Rights offerings are equity instruments similar to warrants that companies can use to raise capital. However, rights offerings usually expire within a much shorter time frame—within a month for rights offerings versus two to five years for warrants and are priced at a discount to the market price of a company’s stock.

To address potentially unsubscribed rights offerings, there exist “underwritten” rights offerings, in which unsubscribed rights offerings typically are pre-purchased by an investment bank or hedge fund at an agreed upon backstop price, versus an “uninsured” rights offering, for which there is no third-party agreement to pre-purchase the unsubscribed rights.

Ellenoff Grossman & Schole's Corporate and Securities Practice Group has substantial experience in all forms of capital formation of publicly-held companies, including Rights Offerings. The Firm's nearly 25 experienced securties professionals represent a portfolio in excess of 35 existing '34 Act public companies.
 

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