Unit 7- Issuing Securities Flashcards
Red Herring
Preliminary Prospectus used to gauge interest
Tombstone Advertisements
The ONLY form of adverstisement allowed during cooling off period
provide information about potential availability of securities and anticipated gross proceed
access equals delivery model
access to prospectus over internet means the prospects has been delivered
Who is responsible for:
FILING REGISTRATION STATEMENT TO SEC?
ISSUER
Blue Skying
When issuer files registration statement with states in which it will be selling securities
Special Purpose Acquisition Company (SPAC)
blank-check companies, who raise capital through issues in order to buy businesses
Primary Offering
proceeds of underwriting go to the issuing corporation
Secondary Offering
proceeds of underwriting go to major stockholder who is selling a major portion of holding
Split Offering
Combination of primary and secondary offering
Shelf Offering
Registration is goof or two years and allows issuer to sell portions of offering over three year period without having to reregister
Private Placement
issues sold to institution or small group of wealthy individuals. THERE CAN BE NO PUBLIC SOLICITATION
Who signs the underwriting agreement?
Issuer and underwriter
Syndicate Manager
Underwriter manager who deals with the issuer
Syndicate Agreement
signed by syndicate members detailing each members commitment and liability
Selling Group
other firms enlisted by syndicate to help sell secuities
- members have no financial liability
Negotiated Underwriting
Underwriter and issuer negotiate offering terms
Competitive Bid
potential underwriters submit bids and issuer chooses the one which would result in lowest net interest cost to the issuer (common in municipal offerings)
Letter of Intent
Signed by?
underwriter contracts with issuer to buy securities at specified price, quantity and date
SIGNED BY Underwriter and Issuer
Market-Out Clause
specifies conditions under which the offering may be cancelled
Standy By Underwriter
If company is issuing additional shares, and shareholders don’t exercise premptive rights, the stand by underwriter steps in
Best Efforts Underwriting
Broker acts as an agent for selling share, DOES NOT take on risk
AON (All or None) Underwriting
underwriter must sell all shares or cancel the underwritin
Mini-Max Offering
common in limited partnership offerings
- set minimum issuance and max issuance
Underwriting Proceeds
the price at which the underwriters buy stock from the issuer
POP
Public Offering Price
Underwriting Spread
POP-Underwriting Proceeds
Syndicate Manager Fee
10-20%
Underwriting Syndicate Fee
20-30%
Selling Concession Fee
50-60%
Green Shoe Option
allows underwriters to sell up to 15% more shares if high demand
REgulation A EXemption
permits issuer to raise up to $5MM in 12 months without full registration (only needs notice of sale and offering circular)
Regulation D Exemption
no full registration needed FOR PRIVATE PLACEMENTS if
issue is privately placed with max of 35 individuals
OR
issue is placed with accredited investors that do not need SEC protection
Restricted Stock/Unregistered STock
private placement stock
Accredited Investor has:
$1MM or more net worth
annual income of $200,000
Rule 147 Exemption
offerings that take place in ONLY one state are exempt from full registration
Rule 144 Exemption
Rules regulating the sale of control and restricted securities
Spinning
practice of allocating shares to individuals who are in position to direct securities business to the firm
Rule 144a Exemption
Qualified Institutional Buyers (QIB)
- $100MM in assets
- no holding period requirements for certain institutional investors in US
Rule 145
protects stockholders of company that proposes to reorganize its ownership structure, acquire new company, etc…
**REQUIRES STOCKHOLDERS BE SENT PROXY STATEMENT
Regulation S
offers and sales made outside the US by US issuers are excluded from registration provisions
