Shareholder Rights Plan question

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SLI Stallone

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Shareholder Rights Plan question

posted on Nov 16, 2010 06:14PM

I have been invested in SLI for about 8 months and have been following this board for some time, just didn't have a reason to post until now. I have two questions that hopefully someone has the answer to. I have tried Googling an answer with no success.

Regarding the Shareholder Rights Plan, if a flip in event occurs it seems that it will cost $50 per to exercise a right and in return receive a share worth twice that. Payment made in advance of receiving the shares.

Q1. Who will have that kind of cash kicking around to potentially exercise if need be? $50 multiplied by anything adds up pretty quick.

Q2. Like many others I'm sure, a good chunck of my shares are held in my RRSP and TFSA. I realize the rights themselves can be held in my RRSP at no cost and with or without value attached to the right. But in order to exercise, how can I do so without adequate contribution room to the account? Even with my simple math skills, $50 X anything = lots!

I am long (and patient!) and pleased a shareholder rights plan is being implemented, just unsure how this can work for the average investor.