1、2023年7月22日星期六公众股的发行方案探讨公众股的发行方案探讨Chapter Outline19.1 The Public Issue19.2 Alternative Issue Methods19.3 The Cash Offer19.4 The Announcement of New Equity and the Value of the Firm19.5 The Cost of New Issues19.6 Rights19.7 The Rights Puzzle19.8 Shelf Registration19.9 The Private Equity Market19.10 Su
2、mmary and Conclusions19.1 The Public Issue The Basic Procedure Management gets the approval of the Board of Directors.The firm prepares and files a registration statement with the SEC.The SEC studies the registration statement during the waiting period.The firm prepares and files an amended registra
3、tion statement with the SEC.If everything is copasetic with the SEC,a price is set and a full-fledged selling effort gets underway.The Process of A Public OfferingSteps in Public OfferingTime1.Pre-underwriting conferences2.Registration statements 3.Pricing the issue4.Public offering and sale 5.Marke
4、t stabilization Several months 20-day waiting period Usually on the 20th day After the 20th day 30 days after offeringAn Example of a Tombstone Advertisement19.2 Alternative Issue Methods There are two kinds of public issues:The general cash offer The rights offer Almost all debt is sold in general
5、cash offerings.19.3 The Cash Offer There are two methods for issuing securities for cash:Firm Commitment Best Efforts There are two methods for selecting an underwriter Competitive NegotiatedFirm Commitment Under a firm commitment underwriting,the investment bank buys the securities outright from th
6、e issuing firm.Obviously,they need to make a profit,so they buy at“wholesale”and try to resell at“retail”.To minimize their risk,the investment bankers combine to form an underwriting syndicate to share the risk and help sell the issue to the public.Best Efforts Under a best efforts underwriting,the
7、 underwriter does not buy the issue from the issuing firm.Instead,the underwriter acts as an agent,receiving a commission for each share sold,and using its“best efforts”to sell the entire issue.This is more common for initial public offerings than for seasoned new issues.19.4 The Announcement of New
8、 Equity and the Value of the Firm The market value of existing equity drops on the announcement of a new issue of common stock.Reasons include Managerial InformationSince the managers are the insiders,perhaps they are selling new stock because they think it is overpriced.Debt CapacityIf the market i
9、nfers that the managers are issuing new equity to reduce their debt-equity ratio due to the specter of financial distress the stock price will fall.Falling Earnings19.5 The Cost of New Issues1.Spread or underwriting discount2.Other direct expenses3.Indirect expenses4.Abnormal returns5.Underpricing6.
10、Green Shoe OptionThe Costs of Public OfferingsEquityProceeds Direct CostsUnderpricing(in millions)SEOsIPOsIPOs 2-9.9913.28%16.96%16.36%10-19.998.72%11.63%9.65%20-39.996.93%9.70%12.48%40-59.995.87%8.72%13.65%60-79.995.18%8.20%11.31%80-99.994.73%7.91%8.91%100-199.994.22%7.06%7.16%200-499.993.47%6.53%5
11、.70%500 and up3.15%5.72%7.53%19.6 Rights If a preemptive right is contained in the firms articles of incorporation,the firm must offer any new issue of common stock first to existing shareholders.This allows shareholders to maintain their percentage ownership if they so desire.Mechanics of Rights Of
12、ferings The management of the firm must decide:The exercise price(the price existing shareholders must pay for new shares).How many rights will be required to purchase one new share of stock.These rights have value:Shareholders can either exercise their rights or sell their rights.Rights Offering Ex
13、ample Popular Delusions,Inc.is proposing a rights offering.There are 200,000 shares outstanding trading at$25 each.There will be 10,000 new shares issued at a$20 subscription price.What is the new market value of the firm?What is the ex-rights price?What is the value of a right?Rights Offering Examp
14、le What is the new market value of the firm?There are 200,000 outstanding shares at$25 each.There will be 10,000 new shares issued at a$20 subscription price.shares 20$shares 000,10share 25$shares 000,200000,200,5$Rights Offering Example What is the ex-rights price?There are 110,000 outstanding shar
15、es of a firm with a market value of$5,200,000.Thus the value of an ex-rights share is:7619.24$shares 000,210000,200,5$Thus the value of a right is$0.2381=$25$24.761919.7 The Rights Puzzle Over 90%of new issues are underwritten,even though rights offerings are much cheaper.A few explanations:Underwri
16、ters increase the stock price.There is not much evidence for this,but it sounds good.The underwriter provides a form of insurance to the issuing firm in a firm-commitment underwriting.The proceeds from underwriting may be available sooner than the proceeds from a rights offering.No one explanation i
17、s entirely convincing.19.8 Shelf Registration Permits a corporation to register an offering that it reasonably expects to sell within the next two years.Not all companies are allowed shelf registration.Qualifications include:The firm must be rated investment grade.The cannot have recently defaulted
18、on debt.The market capitalization must be$75 m.No recent SEC violations.19.9 The Private Equity Market The previous sections of this chapter assumed that a company is big enough,successful enough,and old enough to raise capital in the public equity market.For start-up firms and firms in financial tr
19、ouble,the public equity market is often not available.Private Placements Avoid the costly procedures associated with the registration requirements that are a part of public issues.The SEC restricts private placement issues ot no more than a couple of dozen knowledgeable investors including instituti
20、ons such as insurance companies and pension funds.The biggest drawback is that the securities cannot be easily resold.Venture CapitalThe limited partnership is the dominant form of intermediation in this market.There are four types of suppliers of venture capital:1.Old-line wealthy families.2.Privat
21、e partnerships and corporations.3.Large industrial or financial corporations have established venture-capital subsidiaries.4.Individuals,typically with incomes in excess of$100,000 and newt worth over$1,000,000.Often these“angels”have substantial business experience and are able to tolerate high ris
22、ks.Stages of Financing1.Seed-Money Stage:Small amount of money to prove a concept or develop a product.2.Start-UpFunds are likely to pay for marketing and product refinement.3.First-Round FinancingAdditional money to begin sales and manufacturing.4.Second-Round FinancingFunds earmarked for working c
23、apital for a firm that is currently selling its product but still losing money.5.Third-Round FinancingFinancing for a firm that is at least breaking even and contemplating expansion;a.k.a.mezzanine financing.6.Fourth-Round FinancingFinancing for a firm that is likely to go public within 6 months;a.k.a.bridge financing.
