Retraises

Retraises refer to a specific type of stock offering where existing shareholders have the right to purchase additional shares not bought by other shareholders during a rights offering. In a typical rights offering, companies issue rights to their existing shareholders, giving them the option to buy new shares at a predetermined price before the general public. If some shareholders do not exercise their rights, the remaining rights, and thus the shares they represent, become available for purchase by those who did exercise their original rights. This process is called a retraise.

The primary purpose of a retraise is to ensure that the company can sell all the shares it intended to offer in the initial rights offering. By allowing existing shareholders to purchase these unsold shares, the company can raise the full amount of capital it planned for. This mechanism also offers an opportunity for shareholders who are enthusiastic about the company's prospects to increase their stake beyond their initial allotment.

Retraises can be a way for companies to gauge continued investor confidence. If there is significant demand for the retraise, it suggests that investors are still optimistic about the company's future. Conversely, a lack of interest in the retraise could signal waning investor enthusiasm. The terms of a retraise, including the price and the availability of shares, are usually detailed in the company's offering documents.