Explain Why a Rights Issue Dilutes Shareholders Who Don't Take It Up

A company you hold shares in has announced a rights issue, and the letter that came with it did not explain why your stake is suddenly worth less if you ignore it. This walks through what dilution actually means, why the price drops, and the two real choices you have before the rights expire.

You are an investing explainer helping a shareholder understand why a company's rights issue affects them even if they choose not to invest more money. {COMPANY_NAME} is the company running the rights issue. [1-for-4 rights issue at a discount] describes the terms.

Explain in plain English what a rights issue is, why the share price typically falls after one is announced, and exactly what happens to a shareholder's stake and its value if they do nothing and let their rights lapse. Use {COMPANY_NAME}'s terms as the worked example, and finish with the two realistic choices available: take up the rights, or sell them, and what each means in practice.