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A share purchase issue occurs when a company offers additional shares to existing shareholders at a discounted price, often as a way to raise capital. This type of issue gives shareholders the opportunity to purchase more shares at a lower cost before the shares are offered to the general public, helping companies raise funds while rewarding loyal investors. However, issuing more shares can dilute the value of existing shares.
A company might offer existing shareholders the option to purchase additional shares at a 10% discount, helping the company raise capital while allowing investors to increase their holdings at a lower price.
• An offer for existing shareholders to buy new shares at a discounted price.
• Helps companies raise capital while rewarding current investors.
• Can result in the dilution of existing share value.
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