Cornerstone Total Return Fund’s 1-for-3 Rights Offering: A Detailed Explanation
On April 10, 2025, Cornerstone Total Return Fund, Inc. (NYSE American: CRF) made an important announcement regarding a 1-for-3 rights offering. This offering is contingent upon the final approval of the U.S. Securities and Exchange Commission (SEC). In this blog post, we’ll delve deeper into the details of this offering.
Record Date and Rights Distribution
The Fund has set the close of business on April 21, 2025, as the record date for determination of stockholders entitled to participate in the rights offering. Each stockholder will receive one non-transferable right for every share held as of the Record Date. For fractional shares, the number of rights will be rounded up to the nearest whole number of rights evenly divisible by three.
Subscription Price and Over-allotment
For every three rights a stockholder receives, they will be entitled to purchase one new share of the Fund at a subscription price. This price will be the greater of:
- (i) 112% of net asset value per share as calculated at the close of trading on the expiration date of the offering, or
- (ii) 80% of the market price per share at such time.
It is important to note that fractional shares will not be issued.
Additional Shares for Oversubscribing Stockholders
In addition to the shares offered in the primary subscription, the Fund may offer a 100% over-allotment to oversubscribing stockholders. Stockholders who fully subscribe in the primary offering will have the option to oversubscribe for additional shares, to the extent available.
Impact on Individual Investors
As an individual investor, this rights offering may present an opportunity to purchase additional shares of Cornerstone Total Return Fund at a potentially lower price. However, it is essential to carefully consider your investment strategy and financial situation before deciding to participate in the offering.
Global Implications
On a larger scale, the Cornerstone Total Return Fund’s rights offering is a reflection of the broader financial market trends. Rights offerings are a common way for companies to raise additional capital while allowing existing shareholders to maintain their proportional ownership. This offering could signal a continued interest in the stock market and the potential for further growth opportunities.
Conclusion
The Cornerstone Total Return Fund’s 1-for-3 rights offering represents an intriguing opportunity for existing shareholders and potential investors. By understanding the details of the offering and considering its potential impact on both an individual and global level, investors can make informed decisions regarding their participation.
