RE: Doesn't that mean dilution? is this really dilutive to shareholders? yes and no I guess is the best answer I can come up with.
No - if every current shareholder as of the record date exercised their rights and bought the shares then every shareholder still owns the same piece of the MGM pie that they did befroe the rights offering,
the total invested by each shareholder is higher but on a % basis it's the same ownership interest.
Yes - if some shareholders don't exercise their rights and buy shares and don't sell their rights on the stock market, then they will own a smaller piece of the MGM pie.
the selling their rights on the market is another issue since the market may not value the rights based on the way the deal is structured.
now we as investors in MGM also know that they have no production, no revenues. no CF, and they have expenses and that means every once and a while they need to issue equity, bonds or sell assets to raise money to keep the lights turned on. I'm sure anyone that bought MGM knows this and if they don't caveat emptor.
I didn't expect an equity issue this year as they still ahve cash in the bank and I thought they had enough until some time in 2013 but these dates sneak up on you and if you're not paying close attention, BAM a new offering.
the good thing here is that our CEO and leader is willing to put his cash where his bulls are and that;s in the MGM barn.
we will find out after the rights expiry how many Clayton purchased above his allotted shares, so he appears to be all in MGM. If this was a poker game and it really is in many repects, I guess Clayton would be brunson and his hand must be pretty good for him to go all in.
For the record I will exercise my rights and buy more shares at 0.16 and glady sell them in 2013 for 0.50 or even 1.,00 once we know what is under their land in the central Mackensie, but there is risk for sure but I still like my odds.
I'm not sure the US issues, if you're a US resident but use a CND broker then there shouldn't be a problem but US brokers might not be able to get the rights? not sure.
GL