Clearly now, I've gotten it wrong....misunderstanding of what "authorized" means. Actually, I've never thought much about this, but this is as good a time as any. Tell me, is the following hypothetical situation an accurate picture?
Company XYZ is established with 1,000,000 authorized shares, of which 200,000 are to be issued in an IPO. At some later time, the shares are split 2:1, so there are now 2,000,000 authorized shares, and 400,000 issued. No dilution.
XYZ decides to buy it's rival MNO in a stock swap, and uses some of the unissued shares to do so. No dilution.
Later, XYZ decides it needs operating capital infusion, so it runs a secondary, using previously unissued but authorized shares in a secondary. This results in dilution.
Still later, company decides to split the stock again, but only if the shareholders will agree to release of additional authorized shares still held in treasury, which will be sold in a secondary. Result is dilution.
It is my impression that this last example is what Q is doing. Am I correct or no, please. |
