公众股的发行方案探讨

ExecutiveSummaryThischapterlooksathowcorporationsissuesecuritiestotheinvestingpublic.Thebasicprocedureforsellingdebtandequitysecuritiesareessentiallythesame.Thischapterfocusesonequity.ChapterOutline19.1ThePublicIssue19.2AlternativeIssueMethods19.3TheCashOffer19.4TheAnnouncementofNewEquityandtheValueoftheFirm19.5TheCostofNewIssues19.6Rights19.7TheRightsPuzzle19.8ShelfRegistration19.9ThePrivateEquityMarket19.10SummaryandConclusions19.1ThePublicIssueTheBasicProcedureManagementgetstheapprovaloftheBoardofDirectors.ThefirmpreparesandfilesaregistrationstatementwiththeSEC.TheSECstudiestheregistrationstatementduringthewaitingperiod.ThefirmpreparesandfilesanamendedregistrationstatementwiththeSEC.IfeverythingiscopaseticwiththeSEC,apriceissetandafull-fledgedsellingeffortgetsunderway.TheProcessofAPublicOfferingStepsinPublicOffering Time1.Pre-underwritingconferences 2.Registrationstatements 3.Pricingtheissue 4.Publicofferingandsale 5.Marketstabilization

Severalmonths 20-daywaitingperiod Usuallyonthe20thday Afterthe20thday 30daysafterofferingAnExampleofaTombstoneAdvertisement19.2AlternativeIssueMethodsTherearetwokindsofpublicissues:ThegeneralcashofferTherightsofferAlmostalldebtissoldingeneralcashofferings.19.3TheCashOfferTherearetwomethodsforissuingsecuritiesforcash:FirmCommitmentBestEffortsTherearetwomethodsforselectinganunderwriterCompetitiveNegotiatedFirmCommitmentUnderafirmcommitmentunderwriting,theinvestmentbankbuysthesecuritiesoutrightfromtheissuingfirm.Obviously,theyneedtomakeaprofit,sotheybuyat“wholesale”andtrytoresellat“retail”.Tominimizetheirrisk,theinvestmentbankerscombinetoformanunderwritingsyndicatetosharetheriskandhelpselltheissuetothepublic.BestEffortsUnderabesteffortsunderwriting,theunderwriterdoesnotbuytheissuefromtheissuingfirm.Instead,theunderwriteractsasanagent,receivingacommissionforeachsharesold,andusingits“bestefforts”toselltheentireissue.Thisismorecommonforinitialpublicofferingsthanforseasonednewissues.19.4TheAnnouncementofNewEquityandtheValueoftheFirmThemarketvalueofexistingequitydropsontheannouncementofanewissueofcommonstock.ReasonsincludeManagerialInformation Sincethemanagersaretheinsiders,perhapstheyaresellingnewstockbecausetheythinkitisoverpriced.DebtCapacityIfthemarketinfersthatthemanagersareissuingnewequitytoreducetheirdebt-equityratioduetothespecteroffinancialdistressthestockpricewillfall.FallingEarnings19.5TheCostofNewIssuesSpreadorunderwritingdiscountOtherdirectexpensesIndirectexpensesAbnormalreturnsUnderpricingGreenShoeOptionTheCostsofPublicOfferingsEquity Proceeds DirectCosts Underpricing (inmillions) SEOs IPOs IPOs 2-9.99 13.28% 16.96% 16.36% 10-19.99 8.72% 11.63% 9.65% 20-39.99 6.93% 9.70% 12.48% 40-59.99 5.87% 8.72% 13.65% 60-79.99 5.18% 8.20% 11.31% 80-99.99 4.73% 7.91% 8.91% 100-199.99 4.22% 7.06% 7.16% 200-499.99 3.47% 6.53% 5.70% 500andup 3.15% 5.72% 7.53%19.6RightsIfapreemptiverightiscontainedinthefirm’sarticlesofincorporation,thefirmmustofferanynewissueofcommonstockfirsttoexistingshareholders.Thisallowsshareholderstomaintaintheirpercentageownershipiftheysodesire.MechanicsofRightsOfferingsThemanagementofthefirmmustdecide:Theexerciseprice(thepriceexistingshareholdersmustpayfornewshares).Howmanyrightswillberequiredtopurchaseonenewshareofstock.Theserightshavevalue:Shareholderscaneitherexercisetheirrightsorselltheirrights.RightsOfferingExamplePopularDelusions,Inc.isproposingarightsoffering.Thereare200,000sharesoutstandingtradingat$25each.Therewillbe10,000newsharesissuedata$20subscriptionprice.Whatisthenewmarketvalueofthefirm?Whatistheex-rightsprice?Whatisthevalueofaright?RightsOfferingExampleWhatisthenewmarketvalueofthefirm?Thereare200,000outstandingsharesat$25each.Therewillbe10,000newsharesissuedata$20subscriptionprice.RightsOfferingExampleWhatistheex-rightsprice?Thereare110,000outstandingsharesofafirmwithamarketvalueof$5,200,000.Thusthevalueofanex-rightsshareis:Thusthevalueofarightis$0.2381=$25–$24.761919.7TheRightsPuzzleOver90%ofnewissuesareunderwritten,eventhoughrightsofferingsaremuchcheaper.Afewexplanations:Underwritersincreasethestockprice.Thereisnotmuchevidenceforthis,butitsoundsgood.Theunderwriterprovidesaformofinsurancetotheissuingfirminafirm-commitmentunderwriting.Theproceedsfromunderwritingmaybeavailablesoonerthantheproceedsfromarightsoffering.Nooneexplanationisentirelyconvincing.19.8ShelfRegistrationPermitsacorporationtoregisteranofferingthatitreasonablyexpectstosellwithinthenexttwoyears.Notallcompaniesareallowedshelfregistration.Qualificationsinclude:Thefirmmustberatedinvestmentgrade.Thecannothaverecentlydefaultedondebt.Themarketcapitalizationmustbe>$75m.NorecentSECviolations.19.9ThePrivateEquityMarketTheprevioussectionsofthischapterassumedthatacompanyisbigenough,successfulenough,andoldenoughtoraisecapitalinthepublicequitymarket.Forstart-upfirmsandfirmsinfinancialtrouble,thepublicequitymarketisoftennotavailable.PrivatePlacementsAvoidthecostlyproceduresassociatedwiththeregistrationrequirementsthatareapartofpublicissues.TheSECrestrictsprivateplacementissuesotnomorethanacoupleofdozenknowledgeableinvestorsincludinginstitutionssuchasinsurancecompaniesandpensionfunds.Thebiggestdrawbackisthatthesecuritiescannotbeeasilyresold.VentureCapitalThelimitedpartnershipisthedominantformofintermediationinthismarket.Therearefourtypesofsuppliersofventurecapital:Old-linewealthyfamilies.Privatepartnershipsandcorporations.Largeindustrialorfinancialcorporationshaveestablishedventure-capitalsubsidiaries.Individuals,typicallywithincomesinexcessof$100,000andnewtworthove