funny question, page-4

kalmsg,
Interesting point: Suppose key sp is 12 cents and suppose the "right" is traded at 1 cent. You can buy 1M "rights" for 10,000$. The "rights" in this case are pretty much like options where the strike price is 11 cents. If the shares price goes to 16 cents, you definitly can get 40,000$ form your intial investment (which is 10,000$). At this stage Key (the company) did not get any $. Key will get the money when holders convert the right to regualr shares and send key the 11 cents for each share.

For this reason, If key sp is 12 cents, I guess the "rights" will be traded at 1.2 cent or [(sp -11)*1.2]


In the other hadnd, if the sp touch 11 cents or less, the "rights" still worth something because there is always a chance the sp will jump to above 11 cents. However, if we approach the "closing date" and the sp is below 11 cents, then no one will convert these "right"s to regualr shares since the regualr shares are cheaper (assuming less than 11 cents)....In this case, key the company get no money...actually, that was my point.

this rights is pretty much like options...short term options ("one week options"). I guess key did not choose to underwritten it because they want to save the cost or the financial institutions rejected the application. In any case,underwritten "rights" does not come for free....

For me, if the sp above 11 cents I will send them the check. Otherwise, I will sell the "rights"...Ecah right will be around half a cent in this case...

I am happy to get more shares. Good luck to all,
Amer.