| Title: | Market Investing |
| Moderator: | 2155::michaud |
| Created: | Thu Jan 23 1992 |
| Last Modified: | Thu Jun 05 1997 |
| Last Successful Update: | Fri Jun 06 1997 |
| Number of topics: | 1060 |
| Total number of notes: | 10477 |
I have a general question regarding the issuance of additional shares of stock by a company. I own stock in company that will present a proposal at the next annual meeting to allow a stock split and the issue of additional shares of stock. I understand a straight stock split. After this stock split though, the company intends to end up with *new* shares that will comprise approximately 20% of the total number of authorized shares of common stock. This is a little confusing, but they intend to do a stock split where the shareholders get most, but not all of the new shares. The remaining new shares are "to be issued for future corporate purposes." It seems to me that unlike a straight stock split, I'll end up losing a portion of the value of my stock, although I guess I won't really lose that value until they actually sell the new shares. Is this correct? Thanks in advance /carl
| T.R | Title | User | Personal Name | Date | Lines |
|---|---|---|---|---|---|
| 106.1 | SSBN1::YANKES | Mon Mar 16 1992 11:23 | 15 | ||
It sounds like a really odd way for the company to talk the current stock owners into allowing it to issue more shares, which dilutes everyone's percentage ownership by whatever amount of new shares they want to offer. Are they trying to make people agree to owning less of the company by making them feel that they own more of it? (ie. Someone might come into this with 100 shares and come out of it with 400 and _think_ they own more of the company when their 400 shares is actually a smaller piece of the overall pie than what they started with.) Is this company trying to do this via a single ballot question or are there separate voting questions about the stock split and the issuance of new shares? -craig | |||||
| 106.2 | one ballot issue | ORACLE::WINDNAGLE | Mon Mar 16 1992 12:03 | 10 | |
It is a single ballot issue. In the accompanying information discussing the reasons they want to do this they explain that they think a stock split will make the issue more accessible to smaller investors but they don't give any reasons for holding onto some of the *new* shares. I don't buy their reasoning because the current stock price is roughly $30 per share, which should be accessible to all but the very "smallest" investors. /carl | |||||
| 106.3 | SSBN1::YANKES | Mon Mar 16 1992 17:16 | 7 | ||
Its only $30 a share and they want to do a stock split, and won't/can't explain why they want to dilute _your ownership_ in the company as part of this odd transaction? If I was in your shoes, I'd sell the stock since something just seems too odd here for me to keep trusting that company's management. -craig | |||||
| 106.4 | Is it really dilution? | VSSCAD::SIGEL | Thu Apr 09 1992 14:16 | 16 | |
Re: last few I've seen a lot of proposals come through where the number of issuable shares is to be increased from (say) 30M to 100M, initially to allow the currently issued 22M shares be split, but also to give flexibility in the future. After the split, 44M shares are all that exist, but if the company wants to split again, make a secondary offering, or what have you, they can do this without having to delay until the next annual meeting. Are you sure this isn't the case? Or does the proposal actually say that they'll be issuing shares beyond those required for the split right away, but won't say what these will be used for? If they're issuing extra shares, then they're diluting your stake. If they're just authorizing them, then there is no dilution at this time, and may never be any. Andrew | |||||
| 106.5 | perhaps not | ORACLE::WINDNAGLE | Mon Apr 27 1992 15:19 | 10 | |
RE: .-1 The last message sounds like a pretty accurate description of the proposal (which, incidentally, passed). I guess I don't find it comforting though. It seems like at some point in the future the company will start selling the newly authorized shares, and the shareholders won't find out until the annual (or quarterly) report shows the new number of outstanding shares and the lower dividend per share. Is this what happens? Is it an accepted practice? /carl | |||||