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American Capital Strategies: Management Credibility in Question

ACAS should now do a rights issue. It should give each shareholder a warrant to buy one new share of stock at $3.00, about half the current price.

At that price almost almost all the warrants would be exercised, bringing in a lot of cash. It would dilute existing shares, but not existing shareholders. The cash should of course be used to buy back debt or pay down debt.

It possible, the warrants should be tradeable so that those who don't want the extra shares could sell the warrants.

If the warrants were exercisable in time for the cash, or at least the receivable, to show up on the 12/31 financial statements that would be preferable to having it be later.