How does a stock rights offering work?
A few readers wrote in to ask questions about stock rights offerings (SROs) in response to yesterday’s news that DITO CME [DITO 6.85 0.59%] plans to sell up to P8 billion in new shares through an SRO sometime this December.
An SRO is just like a follow-on offering (FOO) in that both are cases where the company selling the shares is already a public company with listed shares on the PSE. The big difference is that the opportunity to participate in an SRO is only made available to shareholders of that company.
Another substantial difference is the maximum number of shares that existing shareholders can buy is usually capped at some multiple of their existing shares.
The SRO disclosures will provide the dates that will be used to determine eligibility, and the formula that investors can use to figure out how many shares they are able to buy.
MB BOTTOM-LINE
For the DITO SRO, the key is that only existing shareholders on the date of record (whatever that is) will be able to buy shares.
You have to have skin in this game in order to play!
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Merkado Barkada's opinions are provided for informational purposes only, and should not be considered a recommendation to buy or sell any particular stock. These daily articles are not updated with new information, so each investor must do his or her own due diligence before trading, as the facts and figures in each particular article may have changed.
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