Review of Issuing Common Stock：发行普通股票的评论

Review of Issuing Common Stock：发行普通股票的评论 Review:Issuing Common Stock-1 Review of Issuing Common Stock note: issuing debt similar except that must file copy of indenture I. Overview of Process 1. Determine funding needs --$ needed, type of security, etc. 2. Get approval of Board of Directors 3. File registration statement with SEC (at least 20 days before issue) 4. Inform potential investors Prospectus - legal document describing issue Red Herring - preliminary prospectus Tombstone Advertisement - used by underwriters to advertise issue. 5. Market issue. Note: May bring Investment Banker into process at any stage. I.B. - firm specializing in helping other companies issue securities. I. Cash offerings I 1. Overview => new securities sold to general public 2. Role of Investment Banker a. Basic Services (1) Advice - type of security, timing, legal characteristics, price (2) Underwriting => accepts price risk from issuing firm by specifying price at which will buy stock from co. Notes: (1) Usually done by large group of I.B.s => underwriting syndicate. (2) Alternative to Underwriting is Best Effort - I.B. accepts no price risk => sell at best possible price (3) Distribution => sale of securities Note: usually done by large # of IBs => selling group. b. Selecting an I.B. (1) Negotiated => firm chooses I.B. then negotiates terms Corporate Finance Review:Issuing Common Stock-2 (2) Competitive => firm chooses I.B. that bids highest price for securities. Note: Utilities required to use competitive bidding. 3. Costs of Cash Offerings a. Direct Costs 1) Underwriting spread - diff between sales price & price paid to firm by I.B. 2) Other direct costs - legal fees, filing costs, etc. b. Indirect Costs 1) Underpricing - difference between value of stock and price at which issued by I.B. Reason => price inflexibility, want issue to sell. 2) Announcement effect - Stock price decline when announce will issue stock. 3) Diversion of management. III. Rights Offerings => Shares issued to existing S/H Note: Required if preemptive right 1. Procedure (1) S/H receive 1 right for each share owned. (2) S/H can sell right or exercise rights (give up N rights, $X, & receive 1 new share). 2. Role of Investment Banker => usually => stand-by agreement => I.B. agrees to purchase unsubscribed portion of rights offering. IV. Shelf Registration 1. Overview => firm registers issue with SEC & has up to 2 years to issue 2. Conditions (1) Firm rated "investment" grade (2) Firm hasn't defaulted in the last 12 months. (3) Market value of stock >$75 million. (4) No violation of Securities Act of 1934 in the last 12 months. 3. Advantages (1) Firm can issue securities as need funds rather than all at one time. (2) Cheaper than traditional issue. Corporate Finance Review:Issuing Common Stock-3 V. Private Placement => security sold to single investor Note: usually debt or pfd. stock Corporate Finance