For many issuers, a liability management transaction may be part of an overall funding and liquidity management strategy. For others, an exchange offer, consent solicitation or tender offer may be undertaken in connection with a restructuring or recapitalization. For financial institutions or insurance companies, a liability management transaction may serve to address regulatory capital considerations.

We invite you to access our presentation on Liability Management, which aired on March 30, 2020. You can watch the recorded presentation here.

Our book, Structuring Management Transactions, published by the International Financial Law Review, provides a summary of the US legal framework, including guidance provided through no-action letters issued over many years, applicable to these transactions. The book also sets forth themain regulatory and tax considerations that should be taken into account when determining the best approach.

To access additional articles, charts and other related materials, visit our Liability Management Resources page.

 

April 8, 2020
12:00 – 1:00 PM ET
Register here.

PIPE transactions remain an important capital-raising alternative, especially during periods of market volatility.

Whether a public company is seeking to raise additional capital from sector or financial investors, effect a recapitalization or restructuring, or facilitate a liquidity opportunity for an existing stockholder, a PIPE transaction may be the most efficient approach.

During this session, we will discuss:

  • Recent market trends;
  • PIPE documentation and the principal negotiating issues;
  • The securities exchange shareholder approval rules, recent changes to such rules, and the financial viability rule;
  • Using warrants and structuring approaches for at-market deals;
  • Venture capital and private equity PIPE transactions; and
  • Change of control PIPE transactions.

CLE credit is pending.

PIPE transactions remain an important capital-raising alternative, especially during periods of market volatility. Whether a public company is seeking to raise additional capital from sector or financial investors, effect a recapitalization or restructuring, or facilitate a liquidity opportunity for an existing stockholder, a PIPE transaction may be the most efficient approach.

Access presentations, podcasts, articles and other related materials, on our PIPE transactions resource page, as you consider a PIPE transaction.

A number of public companies have experienced dramatic fluctuations in their stock price, trading volume and market capitalization as a result of the recent market downturn triggered by the COVID-19 pandemic.  For registrants concerned about steep declines in their day-to-day market cap in this volatile environment and how the volatility may impact their status as a large accelerated, accelerated or non-accelerated (including a small reporting company or SRC) filer, here are a few reminders:

  1. The determination of filer status is made at the end of the company’s fiscal year and will take effect on the succeeding fiscal year. Hence, an accelerated filer that meets, at the end of fiscal year 2020, the criteria for a large accelerated filer should indicate in the 2020 Form 10-K it files in 2021 that it is now a large accelerated filer.
  2. However, the public float requirement in the filer status criteria is measured and calculated as of the last business day of the issuer’s most recently completed second fiscal quarter. Public float means the aggregate worldwide market value of the voting and non-voting common equity held by the issuer’s non-affiliates. So, in our example, for companies with a calendar fiscal year, that public float test date would mean June 30, 2020.  Under the public float requirements in Exchange Act Rule 12-b2, an issuer must have a public float of $75 million or more, but less than $700 million, to be an accelerated filer; or more than $700 million to be a large accelerated filer.  It would be an SRC if it had (i) a public float of less than $250 million or (ii) had annual revenues of less than $100 million and either (x) no public float or (y) a public float of less than $700 million.  In each of these cases, the public float is measured on the last business day of the issuer’s second fiscal quarter.
  3. The transition thresholds for becoming a non-accelerated filer and entering and exiting large accelerated and accelerated filer status have been recently amended by the SEC, but the public float requirement is still measured on the last business day of the second fiscal quarter. Once an issuer becomes an accelerated filer, it will remain an accelerated filer unless its public float was less than $60 million as of such measurement date. A large accelerated filer will transition to either an accelerated filer or a non-accelerated filer once its public float falls below $560 million as of such measurement date.

For more information on the recent SEC amendments to the definitions of accelerated filer and large accelerated filer, please see our blog post and Legal Update.

The COVID-19 pandemic has resulted in severe market volatility in U.S. capital markets and the loss of significant equity value for many U.S. public companies.  As a result, many companies may be at risk of losing their status as well-known seasoned issuers (“WKSIs”) under the federal securities laws.  A company qualifying as a WKSI may file an automatic shelf registration statement with the Securities and Exchange Commission (“SEC”) allowing it to register an unspecified amount of securities and have such registration statement deemed effective upon filing without waiting for an SEC review.  A WKSI is defined as a company that, among other things, as of a determination date, had a public float of at least $700 million.  The “determination date” that is used to assess a company’s WKSI eligibility may be any date within 60 days before the filing of (i) the shelf registration statement; (ii) the company’s most recent post-effective amendment to a previously filed shelf registration statement; or (3) its most recent Annual Report on Form 10-K or Form 20-F (in the event the company has not filed a shelf registration statement or a post-effective amendment for 16 months).  As a result, a company does not need to have a $700 million public float at the time its automatic shelf registration statement is filed so long as it did reach such threshold within the 60-day period prior to the filing.  This assumes that the issuer would not qualify as a WKSI under the debt issuance prong.

Recently fallen WKSIs with shelf registration statements that expire this year should consider filing an automatic shelf registration statement while they still remain within this 60-day period.  A former WKSI may continue to sell securities registered under a previously filed automatic shelf registration statement until the date on which its Form 10-K for 2020 is required to be filed (assuming that as of the filing of its most recent 10-K this year it qualified as a WKSI).  At that time, the former WKSI will be required to amend its automatic shelf registration statement by filing a post-effective amendment on Form S-3 to convert the automatic shelf registration statement to a regular shelf registration statement.  Given that WKSIs also are entitled to other benefits and accommodations, including certain communications related safe harbors, the issuer should consult closely with counsel.

This First Analysis article discusses some key ramifications of coronavirus outbreak for public companies. In addition to a host of significant general business concerns, such as those relating to liquidity and financing opportunities, revenues, supply chain and employee and community health and welfare, the novel coronavirus known as COVID-19 has raised a number of issues specific to public companies that file reports with the US Securities and Exchange Commission (SEC). These matters include the application of SEC disclosure requirements, logistics for upcoming shareholder meetings and administrative challenges in complying with SEC requirements.

Click here for the full article.

This practice note includes 10 practice tips that may help you, as counsel to a public company or a repurchase agent, in implementing a stock repurchase program on behalf of your client. A stock repurchase program enables a company to buy back a certain number of its outstanding securities. In recent years, the repurchase activity undertaken by U.S. public companies has significantly increased, in part as a result of the tax reforms implemented in 2018. In addition, many companies that have completed recent significant strategic transactions have concurrently undertaken sizeable share repurchases. Shares repurchased by a company are either canceled or kept as treasury stock, which thereby reduces the number of outstanding shares and usually has the effect of increasing the company’s earnings per share.

Click here for the full article.

The Financial Industry Regulatory Authority, Inc. (“FINRA”) recently released Regulatory Notice 20-10, which discusses the recent changes to Rule 5110 (Corporate Financing Rule – Underwriting Terms and Arrangements) (the “Rule”), the main FINRA rule regarding compensation in securities offerings.

Read our Legal Update here.

On March 25, 2020, the US Securities and Exchange Commission (SEC) extended the filing periods covered by its previous conditional reporting relief order for certain public company filing obligations impacted by COVID-19. At the same time, the SEC’s Division of Corporation Finance (Division) issued guidance on disclosure considerations and other securities law obligations related to
COVID-19.

Read our Legal Update here.

 

On March 12, 2020, the US Securities and Exchange Commission (SEC) adopted amendments to the accelerated filer and large accelerated filer definitions in Rule 12b-2 under the Securities Exchange Act of 1934 (Rule 12b-2). The final amendments are intended to reduce the number of issuers that qualify as accelerated filers and reduce compliance costs for smaller reporting companies while maintaining investor protections.

Read our full Legal Update here.