What happens to shareholders who buy the rights but do not hold shares of the conglomerate?
Those shareholders who buy the rights but do not hold shares of the conglomerate on the distribution date, the date in which the actual shares in the spinoff are issued and begin trading, receive their shares in the spinoff, and the when-issued market ceases.
What is a "when issued"?
When issued (WI) is a transaction made conditionally because a security has been authorized but not yet issued. Treasury securities, stock splits, and new issues of stocks and bonds are all traded on a when-issued basis. When-issued orders are made conditionally because they may not be completed, particularly if the offering is canceled.
Why are when issued orders conditionally made?
When-issued orders are made conditionally because they may not be completed, particularly in the event the offering is canceled. Orders, when issued, are sometimes called orders "with ice" or orders "when distributed.". The term is short for "when, as, and if issued.". Securities trade on a when-issued basis when they have been announced …
Why did the industrial conglomerate spin off its chemicals division?
An industrial conglomerate wants to spin off its chemicals division due to its drag on earnings and low margins. In order to effectuate the spinoff, the conglomerate plans to pay its shareholders a dividend in the form of stock of the new chemicals divisions company.
Why are bonds and stocks traded on a when issued basis?
When-issued orders are made conditionally because they may not be completed, particularly if the offering is canceled. When-issued markets can provide an indication regarding the level of interest that a new issue may attract.
Why are orders made conditionally?
When-issued orders are made conditionally because they may not be completed, particularly in the event the offering is canceled. Orders, when issued, are sometimes called orders "with ice" or orders "when distributed." The term is short for "when, as, and if issued."
Why are conditional orders made?
When-issued orders are made conditionally because they may not be completed, particularly if the offering is canceled. When-issued markets can provide an indication regarding the level of interest that a new issue may attract.
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