Rights offering (issue) is an issue of rights to a company's existing shareholders that entitles them to subscribe additional shares directly from the company in proportion to their existing holdings, within a fixed time period.
Rights are often transferable, allowing the holder to sell them on the secondary market.
Companies generally offer rights when they need to raise money
They may need to raise money for a variety of reasons, for example to pay off debt, purchase equipment or acquire another company
The benefit to a company of raising money through a rights offering is that the company can bypass underwriting fees
In some cases, a company may use a rights offering to raise money if there are no other viable financing alternatives
This is common during economic slowdowns when banks become reluctant to lend to companies