Rights, conversions, warrants, takeovers, tenders and exchanges, debt exchanges, debt repurchases, class actions
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Rights issue
Mandatory with options
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Splitting
sell some rights, take up some new shares
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Lapse
Do nothing and receive the lapsed premium
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Poison Pill rights
prevent hostile bids, flip-in = pre, flip-over = post, flood the market with a rights issue
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Rights issue equation
..
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A nil-paid right is effectively a..
call option
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nil paid right
ex price - rights price
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Theoretical ex-rights price
..
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self sufficient equation
rights price / nil paid
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Open offer
AKA a priority, a non-renouncable, a subscription offer. Typically company needs capital for specific purpose
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Conversion equation
...
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Rule 144A
security that is not subject to a public offer. QIB = holding shares from private placements
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US Regulation S
securities outside USA are exempt from SEC registration
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Warrants
price you can take up the warrant = strike/exercise price, covered = company owns shares
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Warrant profit
current bid - strike + premium
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Reasons for a takeover (unique ones)
Can run the company better and asset ********* (dismantle the company)
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Compulsory bid for takeovers
must be made where an investor acquires 30% or more of the voting rights
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Takeover timing rules
Offer details to target = 28 days, Earliest closing date = T21, Last date for announcment = T39, Final closing date = T60
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Tender
A public offer to buy shares under specific terms for set time. Once shares are tendered they are blocked in the market
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Dutch auction
similar to a tender by the company itself is offering to buy back between an upper and lower price. A single strike price is established
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Odd lot
in USA less than 100 shares
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Debt Exchange Offers
A company or government needs to extend the maturity date of an existing bond or change its terms
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Debt Repurchase
Company offers to repurchase a pre-defined amount of bonds at a pre-determined price during a set period with an incentive fee, AKA in USA a Debt Tender Offer
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Japan
ex date to days before record date, announcement one or two months before record date
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Italy
Peak season: April to July, entitlement first business day following the first or third friday of the month, tender lasts 15/45 business days
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Other cards in this set
Card 2
Front
Mandatory with options
Back
Rights issue
Card 3
Front
sell some rights, take up some new shares
Back
Card 4
Front
Do nothing and receive the lapsed premium
Back
Card 5
Front
prevent hostile bids, flip-in = pre, flip-over = post, flood the market with a rights issue
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