Treasury Offering

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DEFINITION

The issuance of an additional class of security already existing in a firm's treasury. During a treasury offering a company needs to raise more money, but doesn't want any extra debt, so they will often issue extra shares of its currently trading equity. Of course, there is a downside to treasury offerings; they are often the cause of dilution for existing shareholders (also defined as sunk costs). These are costs that cannot be reversed.



INVESTOPEDIA EXPLAINS

These company shares are unlike regular shares that are marked as outstanding in the company's financial statements. These are not considered outstanding nor are they used to calculate dividends or earnings per share. Sometimes this treasury stock refers to stock that has been bought back by the corporation from shareholders. Since these were shares that were previously in the market, the funds spent the first time issuing the stock are now considered a sunk cost. This transaction lessens shareholder claim to the companies' earnings or assets.


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