can someone explain to me, if I am short 1mill shares at $4 a share, did I lose money with these rights made money right now, or what the hell is going on? And where are the shares that I owe to pay for? I can't understand this at all.
Institutions that have a very heavy position in Sealy will want to buy rights to enforce their investment. At worst, institutions will want more rights than common shares because that's how the ownership is calculated.
I see the rights going approx 30% higher than the shares.
This is horrible for the shareholder. Everyone who was long on the ex date should be selling their long post ex date so they can use the proceeds to buy the $25 right that converts to common at $1.00. In addition, they should be shorting the stock to lock in the profit they have in the convertible note they are about to buy for $25.