Subscription Price
1. A static price at which existing shareholders can participate in a rights offering conducted by a public company so they may retain their proportional ownership of the business. The subscription price will be the same for all shareholders and typically less than the current market price of the underlying stock.
2. Subscription price may also refer to the exercise price for warrant holders in a particular stock. Warrants may be issued at different times by the company along with debt offerings, so subscription prices may vary slightly from one owner to another. Investopedia Says:
Rights and warrants offerings are less common ways to raise capital than through a secondary offering of stock, and may signal a lack of demand for shares in the open market. Issuing rights encourages more long-term ownership of the company, as existing shareholders are increasing their investment in the company.
A rights offering may also come with an oversubscription privilege that allows existing shareholders to pick up any extra rights to shares not claimed by other shareholders. Rights offerings tend to happen pretty quickly, as the subscription price is static and needs to be relevant to the current market price for shareholders to be interested in the deal. Related Terms:
Cum Rights
Oversubscription Privilege
Rights Offering (Issue)
Warrant
Warrant Premium |