【導(dǎo)讀】onequity.privatesources.market.ExchangeCommission(SEC).publicmarkets.Advantages. Disadvantages. Lessliquid. TheBasicProcedure. prospectus.TheBasicProcedure

　　

【正文】 = = ? Shareholders must give up two rights plus $10 to receive a share of new stock. Effect of Rights Offering on Price of Stock ?When stock price of National Power is $20 on the expiration day, all investors will exercise the rights and buy new shares of the pany at $10 per share. ?After rights offering the value of the firm is $25 million and the shares outstanding is million. The exrights stock price is then $25/=$ per share. Value of Rights ?Any investor with 2 rights can buy 1 share of National Power which is worth $ per share after rights offering at a price of $10. ?The value of 2 rights is clearly $$10=$, which means $ for 1 right. Effects on Shareholders’ Wealth ?What can an investor do with National Power’s rights offering if she owns 2 shares of the pany? (1) Exercise the rights and buy 1 new share of the pany. (2) Do not exercise and sell the rights. (3) Do not exercise and let the rights expire. Strategy Wealth before Rights Offering Wealth after Rights Offering Control Rights (1) 20*2+10=50 *3=50 No Changes (2) 20*2=40 *2+=40 Diluted (3) 20*2=40 *2= Diluted ?If (1) occurs, the investor owns 3 shares. The total wealth of the investor is $ * 3 = $50, which equals $20 * 2 + $10. ?If (2) occurs, the investor owns 2 shares. The total wealth of the investor is $ * 2 + = 40, which equals $20 * 2. ?If (3) occurs, the investor owns 2 shares. The total wealth of the investor is $ * 2 = $, which is less than $40 The Underwriting Arrangement ?Undersubscription can occur if the stock price falls below the subscription price. ?Rights offerings are typically arranged by standby underwriting. ?The underwriter makes a firm mitment to purchase the unsubscribed portion of the issue at the subscription price less a takeup fee. The Rights Puzzle ?Over 90% of new issues are underwritten, even though rights offerings are much cheaper. ?A few explanations: ? Underwriters 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 firmmitment underwriting. ? The proceeds from underwriting may be available sooner than the proceeds from a rights offering. ? The successful rights offering depends on the ownership structure ?No one explanation is entirely convincing. Shelf Registration ?Rule 415 permits a corporation to register all the offerings that it reasonably expects to sell within the next two years. ?Not all panies are allowed shelf registration. ?Qualifications include: ? The firm must be rated investment grade. ? The cannot have recently defaulted on debt. ? The market capitalization must be $75 m. ? No recent SEC violations. The Private Equity Market % % % Private Rule 144A placements Private nonRule 144A placements Public equity offering ?The private equity market is important for both traditional startup panies and established public firms. ?Private equity market can be divided into venture equity and nonventure equity market. ?Some important nonventure equity investment: ? Distressed investment ? Mezzanine capital ? Leverage buyout Suppliers of Venture Capital ?Wealthy families (Rockefeller family) ?A number of private partnerships and corporations (American Research and Development, ARD) ?Venture capital subsidiaries of large industrial or financial corporations ?Angel investors (informal venture capitalists) Stages of Financing Stage: Small amount of money to prove a concept or develop a product. Funds are likely to pay for marketing and product refinement. Financing Additional money to begin sales and manufacturing. Financing Funds earmarked for working capital for a firm that is currently selling its product but still losing money. Financing Financing for a firm that is at least breaking even and contemplating expansion。 . mezzanine financing. Financing Financing for a firm that is likely to go public within 6 months。 . bridge financing.