Secondly, assuming the stock trades where it is at 4.70, when the rights are separated, the stock trades ex rights and is now worth $3.93. The rights are worth $.77 and the warrants are anybody's guess. Plug that into your valuation model. My guess is that an equity offering won't be available to most current investors unless they have a relationship with the lead underwriter so you have to subscribe for extra rights shares. The company takes $35million of its hard fought cash to pay as a fee for this "backstop" and gives another 8 million shares or about 7% of the newly outstanding shares to management as a bribe. All told this is massive dilution to resolve a problem that is being resolved right now with NG rising again. They want to do a deal because they think the bottom has been reached and don't want to miss their chance to steal the prize. Wake up man!!! NGP is NOT trying to help us!!
"The rights are worth $.77 and the warrants are anybody's guess. Plug that into your valuation model"
You're argument is that the valuation should be based on market price.
Instead my valuation is based on intrinsic value in turn based on discounting future distributions. I'm not suggesting that the rights will trade at their intrinsic valuation but a buyer with a reasonable timeframe could reasonably expect that to be worth that much over time if they exercised them.