Term of the day: "Rights Issue"
A rights issue is an invitation to existing shareholders to purchase additional new shares in the company. This type of issue gives existing shareholders securities called rights. With the rights, the shareholder can purchase new shares at a discount to the market price on a stated future date. The company is giving shareholders a chance to increase their exposure to the stocks/shares of the company at a discount price.
A rights issue is one way for a cash-strapped company to raise capital often to pay down debt. Through rights issue, the number of shares of the company (issued) will increase and the company gets more capital and through this new capital, the company can reduce/pay its debt.
✅ Credit rkdev