I read an article recently on companies enaging in rescue rights issues as it was referred to. As I understand it the rights issue is made with the intention that there will be scanty minority shareholder participation in such issue. Skinwell was mentioned as an example. Subsequent to the low take up majortiy sharholders for e.g. Management and Advisors/Related Parties then buy back the company control at a vast discount and effectively own the majority shareholding. Percentages of 70-90% was mentioned. This raises the disctinct possibility then of delisting which I assume will compromise the position of the minorities. Apparently this has happended in the past and small caps listed between 2006-2008 sometimes at significant share premiums,seem to be the ideal candidates for such. My question, is this a disctinct possibility in the market environment acurrently and does it represents a risk that every investor in small caps should give due consideration? Also what are the implications for delisting to an investor besides the ease of tradeability of such shares.
delisting is a real possibility .. an frankly only reason we haven't seen more I would suspect is because capitasl has been hard to get .. but also remember that depending on how things are being done, the majority share holder can not vote their shares if they are the ones taking it over .. check verimark ..