Can A Rights Issue Save Cytori Therapeutics Inc. (NASDAQ:CYTX)?

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As part of the efforts to raise additional capital, Cytori Therapeutics Inc. (NASDAQ: CYTX) recently announced a rights issue offering. The company has yet to reveal how much it expects to raise through the rights issue, but it recently provided an update about how the process will be executed. The update on the rights issue came at a time when Cytori also cited positive progress in its internal efficiency drive.

Stockholders of record

To participate in Cytori Therapeutics Inc. (NASDAQ: CYTX)’s rights issue; you must have been an investor in the company by the close of business on May 17, 2016. Those who didn’t get into the stock before that date are out of luck, according to the company, because they are not considered eligible for the rights offering.

What’s on offer in the rights issue?

Stockholders of record as of May 20 will get a subscription right for every share of the common stock of Cytori they own. The right gives the holder the opportunity to purchase a unit at the subscription price. Each unit comprises one share of Cytori’s common stock and half a warrant. You need a full warrant to exercise the right to purchase a share of the company’s common stock.

When can you exercise the rights?

The rights can be exercised during the subscription period that will run between May 23, 2016 and June 9, 2016. But Cytori Therapeutics Inc. (NASDAQ: CYTX) reserves the right to extend the subscription period.

It is important to note that Cytori’s subscription rights are non-transferable. However, stockholders who exercise their rights fully will get the opportunity to purchase additional units from the pool that wasn’t utilized by the holders.

Cytori Therapeutics Inc (NASDAQ: CYTX) is working with Maxim Group LLC to help with the rights offering.

1Q2016 highlights for Cytori Therapeutics Inc. (NASDAQ: CYTX)

Cytori Therapeutics Inc. (NASDAQ: CYTX) reported that its 1Q2016 net loss narrowed to $5.3 million or $0.41 a share from $6.5 million or $0.92 a share a year earlier. The company also managed to post a higher revenue figure of $2.9 million compared to $2.3 million. However, operating cash burn ticked up a bit to $5.1 million from $5 million in the corresponding quarter of the prior year.

2016 guidance

However, Cytori Therapeutics Inc. (NASDAQ: CYTX) hopes to continue reducing cash burn and management has guided for cash burn in the band of $18 to $20 million for full year 2016. Revenue for the year is guided in the range of $12 to $14 million.

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