Just received one rights for every three shares I have in Cornerstone (CRF %26amp; CLM)|||Companies (and closed-end funds) offer rights offerings to raise more money (capital) ~ instead of a secondary IPO. By offering you a right, you can usually buy more shares at a specific price (often at a discount). This prevents you from "dilution" so you're interest in company does not decrease as a percentage of the shares outstanding. Don't feel obligated to proceed unless you are a major shareholder - or the price is really good.|||A rights offer gives you the 'right' to buy the number of shares offered to you based on your current holding, which are usually substantially discounted to the market price.
Companies issue them when they need to raise additional funds.....this could be for investment which could be good for the long term out look of the company, but it could be because they are struggling to repay debts or are losing money, so it could be a bad sign for the long term outlook of the company.
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