Chief executive Barry Richardson said it was expected the three million mandatory convertible cumulative preference shares would have a $1 a share face value.
They would pay a gross dividend of 10% every six months, and, after three years, would covert to ordinary shares at 95% of the prevailing share price, but subject to a minimum conversion ratio of 25 ordinary shares per preference share and a maximum conversion ratio of 100 ordinary shares for each preference share.
Existing shareholders would be entitled to one preference share for every 45 fully paid ordinary shares they held.
Mr Richardson said, subject to shareholder approval, the issue would be underwritten up to $3 million by Edinburgh Equity Nominee Ltd.
Edinburgh Equity, the investment company owned by Eion Edgar and Dunedin businessman Tony Offen, already owned 4.88% of Blis, and shareholders would also be asked to approve an option for Edinburgh to buy an additional one million preference shares if they could not get an adequate stake from the initial offer.
Mr Richardson said Blis and Edinburgh Equity had worked closely together. Its principals believed in its biotechnology products, and they wanted it to remain Dunedin-owned.
"This would allow Edinburgh Equity to participate," he said.
In addition, Edinburgh was lending Blis up to $500,000 until income was received from the rights issue, with the money to be repaid on the issue of preference shares.
As a result, Edinburgh could increase its stake to more than 20%, at which point the Takeovers Code came into effect.
Mr Richardson said shareholders would also be asked to approve an application to the panel, should that threshold be reached.
At present, Blis's largest shareholders had about 8% of the shares, including the University of Otago's investment arm, Otago Innovation.
Mr Richardson said whether Edinburgh became the largest shareholder depended on how shareholders responded to the rights issue.
Blis would use the $3 million for some capital expenditure, working capital and to secure more regulatory approval, including permission to use its flagship Blis K12 in food.
He said initial feedback from shareholders to the proposal had been positive.
A shareholders' meeting would be held on or about March 31.
