Investment Banking.txt

(Current Assets - Inventory) / Current Liabilities

Current Assets / Current Liabilities

(Current assets - Inventory - Receiveables ) / Current Liabilities

• DIO + DSO + DPO
• Days Inventory Outstanding
• +
• Days Sales (Receiveable) Outstanding
• +
• Days Payable Outstanding

= Income = Profit

= Sales

Gross Profit / Revenue

Gross Profit = Revenue - COGS

Operating Profit / Revenue

Pre-Tax Profit / Revenue

Net Profit / Revenue

(Revenues - COGS) / Revenues

Revenues - COGS

EBIT - Earnings Before Interest and Tax

EBIT / Revenues

(Gain - Cost) / Cost

• Income / Average Total Assets
• or
• Profits / Average Total Assets

• Income / Average Shareholder Equity
• or
• Profit / Average Shareholder Equity

Total Liabilities / Total Assets

A good measure of LEVERAGE

Total Liabilities / Total Shareholder Equity

a good measure of LEVERAGE

Long Term Debt / (Long Term Debt + Shareholder Equity)

how much role log term debt plays in the capital structure of the company

a good measure of LEVERAGE

EBIT / Interest Expenses

ability of the company to pay its short-term interest paymentrs

DIO + DSO - DPO

How many days it takes to for a company to convert purchases of inventory into cash receipts

Twin of "Cash conversion cycle"

Average Inventory / ( Cost of Sales / 365)

Average Inventory = (inventory at beginning of year + inventory at end of year) / 2

Cost of Sales / 365 = Cost of Sales per Day

• Average Account Receivable / (Sales / 365)
• = 365* Accounts Receivable / Sales
• Average Account Receiveable = (account receivable at beginning of year + account receivable at end of year) / 2

Sales / 365 = Sales per Day

Average account payable / (Cost of Sales / 365)

Average account payable = (account payable at beginning of year + account payable at end of year) / 2

Cost of Sales /365 = Cost of Sales per Day

Revenue / Property, Plan and Equipment (PPE)

Income Tax Expense / Pre-Tax Income

Equity Value + Total Debt + Preferred Stock + Minority Interests - Cash and Cash equivalents

Enterprise Value is independent of the capital structure

Share Price / Diluted EPS

or

Equity Value / Earnings

EPS = Earnings per Share

M&A Antitrust regulations

Annual Interest Rate / MarketPrice of the Bond

Coupon Value

Face value, or principal value of Bond

(Coupon Value +/- Discount or Premium/number of years) / (Par Value + Current Price)/2

TIA requires written agreement of trust indenture for debt above $5M, and an independent trustee

Unsecured debt, based on "good faith"

Par Value / Conversion Price

Market price of the bond / conversion ratio

Market value of the stock * conversion ratio

Assets = Liabilities + Shareholder Equity

Total debt - cash equivalents

COGS / Inventory

365 * Inventory / COGS

Public offering is exempt from SEC registration requirements if the offering does not exceed $5M in 12 months; Issuer files a notification, offering circular and exhibits.

• TO - Tender Offer
• must be filed by entities expect to own more than 5% of the target company's shares

required to be filed by those to declare that they have acquired more than 5% of the public company common stock

provides public information about entities involved in tenders, other than the acquirer

must be filed by the target company to announce its response to the tender offer

difference between the POP - Public Offering Price and the Underwriting Proceeds

Spread includes the manager's fee, underwriters fee and the selling concessions

in downward interest rate scenario, difficulty in finding comparable re-investment opportunities for fixed income

in upward interest rate scenario, the risk of bond pricing coming down

Selling new issues before registering them with SEC

• worldwide stock capitalization / public float of $700M plus;
• has issued at least $1B non-convertable securities in last 3 years;
• eligible to use Form S-3 for securities offering

• worldwide market capitalization of $75M +
• Can use Form S-3 for filing for primary offerings

over-allotment option for underwriters to offer more shares than stated in the underwriting agreement

EBIAT = EBIT - Taxes

• FCF = EBIAT + DA - CAPEX - (Increase / decrease) in NWC
• EBIAT = Earnings before Interest after tax
• NWC = Net Working Capital

non-cash expense that reduces the book value of the company's long-term fixed assets or Property, Plant and Equipment (PPE), over an estimated useful life

non-cash expense that reduces the value of the company's definite life intangible assets

uniform depreciation expense during the life of the asset

assets lose most of their value in early years

EBITDA - EBIT

copyrights, NDAs, licenses, patents, trademarks, & intellectual properties, customer lists,

• Management's Discussion and Analysis
• in Part II of 10-K

• Current Assets - Current Liabilities (from Balance Sheet)
• Current Assets = Accounts Receiveable + Inventory + Prepaid expenses & other current assets
• Current Liabilities = Accounts Payable + accrued liabilities + other current liabilities

• Use of cash,
• Subtracted from EBIAT

• Source of cash
• Added to EBIAT

Cash Flow Statement

• (1) Operating Activities
• (2) Investing Activities
• (3) Financing Activities
• Added to produce ending cash balance for a particular period

The financing mix of debt and equity that minimizes WACC, thereby maximizing company's theoretical value

• required annual rate of return company's equity investors expects to receive
• Capital Asset Pricingh Model (CAPM)
• = r(f) + beta * maket risk premium

• return on riskless security, such as T-bills, T-Notes and T-Bonds
• Use as long a period as possible, compare to the lenght of the target company, eg 10 yr or 30 yr T-bonds

• spread of the expected market return over the risk free rate
• = r(m) - r(f)
• about 4% to 8%

• Covariance of rate of return for the equity and the overall market return
• beta of 1.0 - S&P 500 average
• beta <1 has less systematic risk
• beta >1 has more systematic risk

(r(d) * (1 - t)) * D/(D+E) + r(e) * E/D+E)

• where
• r(e) = r(f) + beta * market risk premium + size premium

• Exit Multiple method,
• and
• Perpetuity Growth method

= EBITDA(n) * Exit multiple

• = FCF (n) * (1 +g) / (r - g)
• where
• g = perpetual growth rate
• r = WACC - discount rate
• n = terminal year

• = 1 / (1 + WACC ) to the power n
• where n is the projection period

= FCF(n) * Discount Factor (n)

• Cash flow based
• Market independent
• Self sufficient
• flexibility

• Deoendence on financial projections
• sensitivity to assumptions
• terminal value
• assumes constant capital structure

Bond yields, Weekly average jobless claims, stock market indices, building permits, M2 money supply, inventory levels, manufacturing orders

Unemployment numbers, corporate profits, interest rates

GDP,Employment, personal income, industrial productions, retail sales, consumer spending, manufacturing sales, inventory / sales ratio,

Total debt - cash

3-6 months

Used for SEC registration of any new issued securities

Short form for S-1 and used only by qualified companies to file for securities issued

Puts all backs under SEC registration for security trading, except credit unions

Nationally recognized statistical rating organizations such as Moody's, S&P

Any felony or misdemeanor involving securities within 10 years

Long term rates are more volatile than short term rates

Tbd

• Issued outside of the USA
• Not subject to SEC registration

Two years

Natural resource companies, for production capacities

Selling new offerings immediately

Refers to OTC, negotiated price trading of exchange listed stocks

They are in Act of 1934

Securities Exchange Act of 1934

Applies to securities subject to registration requirements as well as those that are exempt, such as government and municipal securities

• Price manipulations by purchase and sale without changing ownership -
• An illegal transaction an investor makes by simultaneously buying and selling a security through two different brokers, thereby creating the illusion of activity. Investors do this to try and recognize a tax loss without actually changing their position.

Two people acting in collusion

Group of people involved in Matched Orders

An illegal action by a group of market manipulators buying and/or selling a security among themselves to create artificial trading activity, which, when reported on the ticker tape, lures in unsuspecting investors as they perceive an unusual volume.

When prices are set artificially at certain level

A suit must be brought against alleged bookstore with 3 year of the activity and within 1 year of discovery

Ethical barrier, Prevention of free flow of restricted, non-public information

• Civil penalties: treble damage, up to 3 times profit,
• Criminal penalties for willful violation: up to $5M and 20 yr. jail

By 15th of the month following the quarter the trading took place

Adopted in 1970, provides basic framework for anti-money laundering (AML) obligations

Administrator of BSA, receives various forms from banks for AML

Banks must file CTRs if cash deposits over $10K on same day; must be filed within 15 days

FinCEN, bureau within treasury department

Must be filed with FinCEN within 30 days, activities suspicious of money laundering

Strengthened the BSA for AML, anti-money laundering obligations

AML compliance programs, customer identification programs, mandatory info sharing with Feds,

$100 limit per year

• Pegging
• Wash sale
• Matched purchases

Must be in font as large as the rest of the statement

25 neutral individuals

EBIT

Operating Income + D&A

Or

EBIT + D&A

Transaction involving sale of new securities from an issuer to an investor

90-180 days

• Auction
• Negotiated sale

30 days

M&A database

Usually receives higher dividends, but usually does not have voting rights, but senior to common stocks at liquidation

Investment banker checks IPO calendar to evaluate competition and supply

Annualized discount percentage or basis

32nds

• Barred from securities industry for 10 years,
• U-4 form must be amended within 10 days

Bidder re-bids after due diligence at a lower price

Underwriting agreement clause to cancel a purchase agreement without penalty

Inspection of OSJ once a yer, and branch offices once every three years

Rights are short term, allow shareholders to buy below market price, protect against dilution; warrants are long term, generally higher price, used in conjunction with bonds, do not protect shareholders from dilution!

Mediation is voluntary, parties may choose mediator and may stop anytime; arbitration is final and binding, cannot be stopped and appointed by NAMC

Regulates and require the registration of exchanges, broker dealers and their representatives and other participants in the secondary market

Regulate the offer and sale of securities and requires sufficient investor information, thru registration process; focus on Primary market

For NYSE

NASDAQ and OTCBB

Duration

The greater the bond's duration, the greater it's sensitivity to movement in interest rates

Typically structure as partnerships to pass revenues and tax deductions directly to limited partners

National arbitration and mediation committee

• <$25k. One arbitrator
• Between$25k and $100k,one arbitrator unless parties ask for three
• >$100k three arbitrators unless parties agree to one

All documents in 20 days before hearing; decision within 30 days; awards to be paid within 30 days

When you sign U-4, you gives up the right to sue, And use arbitration for almost everything

Most Records should be kept for 3 years, some records such as general ledger and customer records must be kept for 6 years

Whenever an issuer, or any person acting on its behalf, discloses any material nonpublic information regarding that issuer or its securities to [certain enumerated persons], the issuer shall make public disclosure of that information... simultaneously, in the case of an intentional disclosure; and... promptly, in the case of a non-intentional disclosure.

Verify the identity of all US and non-US customers, as part of AML compliance

Under regulation FD, required public disclosure is made by filing 8-K with SEC

Registration statement used in a merger, acquisition or exchange offer

Registration statement filed for offering securities to company employees thru employee benefit plan

Registration statement filed for offering real estate investment companies, including Real Estate investment Trusts (REITs)

Common shares held by the public, not by the insiders

• DCF
• Comparable transactions
• Comparable public companies
• Unique industry metrics

• Contingent fees,
• Material relationship within 2 years
• Independent verification of info,
• Fairness committee approval,
• Insider compensation

Minimum two people who have not been involved in the transaction; independent

Securities act 1933 prohibits fraud in initial sale, while securities act 1934 prohibits in secondary market transactions

Over the counter Bulletin Board

Over the counter, negotiated price trading of exchange traded securities

Direct trading of large blocks of securities between institutions and/or retail investors; these are traded over ECN, electronic communication networks

Those who misappropriate (steal) information from their employers and trade on that information not just their employer's stock but any stock, are guilty of insider trading

Applies when two people have history of sharing non-public information in confidence

• Reclassifications - substitution of one security for another,
• Merger, acquisitions or consolidation- change of securities into securities of another,
• Transfer - exchange of assets

• In most cases, registration is made thru form S-4, and F-4 for foreign companies.
• However, for all cash transactions, no SEC filing required

No SEC filing with S-4 is required, unless the transaction is contingent on shareholders vote

• Proxy statement filed with SEC for tender offers
• PREM14A - preliminary
• DEF14A- definitive

Sent out at least 10 days prior to DEF14A

Automatic stay on creditor claims as soon as bankruptcy petition is filed

Some creditors claims paid in full while others may be "impaired", ie paid less than full value

Once the final plan is approved by 2/3 of dollar amount first class impaired creditors and at least 1/2 of number of claims, then the judge signs off on the plan, remaining creditors have to accept the plan

Not always wiped out, but greatly reduced in the reorganization

New loans extended to debtor after Chapter 11 filing; new creditors move to the head of the line for debt payment

Deptor in Possession - is a fiduciary capacity and has trustee powers granted by bankruptcy code

Section 341 meeting, at least one meeting of creditors, where creditors examine debtor's compliance with DiP requirements; US trustee presides over section 341 meeting

Prospective acquirer buys the debt instruments of the distressed company; after filing for Chapter 11, DIP signs agreement with acquirer; acquirer signs Asset PurchaseAgreement (APA),then makes aPre-emptive bid to acquire; agreement may include "stalking horse" provisions

• Break up fee,
• Accelerate deadline for submitting bids,
• Reimbursement for DD for stalking horse bid,
• Additional restrictions or requirements on outside bidders,

Stalking horse bid short circuits and accelerates the bankruptcy process

Certain restrictions on voluntary prepayments f bank debt or redemption of bonds, during defined time period; may prevent prepayments or require a substantial fee (call premium)

Requires the borrower to maintain it's credit profile in accordance with financial projections it presents to lenders during syndication; tested on a quarterly basis

Priority status of of debt instruments at a legal entity

Lender's right to have the principal due immediately; after an event of default has occurred, lenders have the right to accelerate their debt and require immediate payment

• Financial Industry Regulatory Authority
• Self Regulatory Organization (SRO)
• Certain regulatory authority is delegated by SEC to FINRA

Many states also regulate the securities business under separate state securities laws, called blue sky laws

Protect the investors by maintaining fairness in the US capital markets

• Registering and educating industry participants,
• Writing rules and enforcing those res and the rules of SEC,
• Examining firms for regulatory compliance,
• Administering dispute resolution ,
• Performing market regulations for various exchanges such as NASDAQ, American stock exchange

• Securities Investor Protection Corporation
• Created by Congress
• Funded by member assessments to protect the clients of brokerage firms that are forced into bankruptcy

Bankrupt brokerage firm clients coverage up to $500k cash and securities, but cash us limited to $250k

• Broker dealer must register with SEC and also become a FINRA member for further regulatory insight.
• Firm files New Member Agreement and form BD

Uniform Application, for Associated Persons application after the firms application has been approved

Contains personal information about each broker, including verification of employment for the last 3 years

At least 2 principals and at least associate themselves with financial and operations Principal

If you fail, you have to wait30 days before taking it again. If failed 3 times, need to wait 180 days

If an individual leaves broker dealer and does get sponsored thru another firm for 2 years, his registration is terminated; qualifying exams must be passed again

• Updates on individual
• Must be filed within 30 days of the event; statuary disqualification must be reported with 10 days.

• Subchapter C corp
• Subchapter S corp
• Limited Liability companies
• Limited Partnerships
• Trusts
• Master Limited Partnerships
• Real Estate Investment Trusts
• Hedge Funds
• Private Equity Funds

S corp can make a selection to avoid double taxation

• Domestic only
• No more than 100 shareholders
• All shareholders are individuals
• One class of stock

With the use of anOperating agreement

• Partnership,
• Sole proprietorship,
• C corp,
• S Corp

RULPA, revised uniform limited partnership act

• General Partners (unlimited liability) and
• Limited Partners (limited liability)

• Defined by SEC Regulation D:
• - director, partner of officer of the issuer
• - individual with net assets more than $1m inc spouse
• - an individual with $200k income in last 2 yrs, or Joint incime of $300k in last 2 yrs, with exoectation to Continue
• - a trust formed not just to acquire the stock, with assets > $5m

Limited partnerships offered to public thru exchanges, no double taxing;

• 75% of total assets in real estate
• 75% gross income from real
• estate
• 90% of taxable income must be distributed

• 7a loans - for new business purchases
• VC program loans -for small businesses

Giving existing shareholders right to acquire additional shares, proportionate to their existing shares at a discounted price

Sold to accredited investors as equity, debt, preferred or convertables

• Private placement by public companies to investment funds and accredited investors
• Securities are restricted, since they don't have to be registered to SEC
• PIPE investors also receive warrants and get stocks at discount

If at least 50% paid in stock, seller is taxed only for the cash amoung

If at least 80% is paid in stock, seller is taxed on cash amount

A private company buys a public company, mostly a friendly takeover

Public company or parts of it are acquired by investors using borrowed funds

• High Net Worth - exceeding $1-2m
• Very high net worth - between 5 and 50 m
• Ultra high net worth- exceeding $50m

Mutual funds, ETFs, hedge funds, private equity funds, broker dealers

• Investors with more than $100m holdings
• Can participate in restricted unregistered security offerings under Rule 144A

• Reports revenues, expenses and net profits for a year or quarter
• Drives Earnings per Share EPS calculations
• DRI

• Reports assets, liabilities and shareholders equity at a particular time
• Drives company's book value per share

• Includes cash generated or used by
• - operating activities,
• - investing activities and
• - financing activities
• During a particular period

Replacing GAAT generally accepted account principles

Non cash accounting expenses usually reported under SG&A which is part of Operating Expenses

Portion of the tangible property or equipment claimed as an expense during a period due to decline in value or wear & tear

Non-cash expense claimed for intangible assets, such as goodwill, IPR, etc

• Operating profit
• Operating income
• Income from operations

• Fixed cost / (fixed cost+variable cost)
• Fixed cost is SG&A + other expenses
• Variable cost is COGS

current assets=liabilities+shareholder value

Shareholder value is also net worth or book value of the company

= cash + those than can be converted to cash within a year, account receivables, inventory, supplies,Pre-paid expenses

• Property plant and equipment PPE
• Intangibles such as goodwill, deferred tax assets, long term investments

Created when one company acquires another company for a price greater than the book value

• Copyrights
• Patents
• Trademarks

Created when a company depreciates property faster on SEC filing than they do on tax returns; eventually decays to zero due to paying less taxes in the future

• Payments,debt, obligations due within 1 year
• Wages, accounts payable,notes, interest, taxes

• Exempt transactions
• Outside the scope of SEC registrations

• Sophisticated investors
• Agree not to sell to public
• 2 yr holding period

Based on company business plan

• Help issuers in all aspects of the fundraising
• Compensation is % of funds raised

• Sales contract between investor and the company raising funds as part of private placement
• Must include a investor suitability questionnaire

• Fundraising by FINRA member company,
• Subject to rule 5122
• Must file offering docs with FINRA, but no requirement to wait

Outline of the material provision and conditions of an offering

• IPO or additional issue
• Primary offering, or Secondary offering or
• Split offering

• Firm commitment - purchase all shares
• Standby commitment- type of firm commitment for existing shareholders, also called rights offering
• Best efforts - attempts to sell all but no obligations,usually for higher risk stocks
• All or None - if not all shares are sold, offering is cancelled
• Mini-Max - similar to all or none

• - Negotiated process / bake off
• - competitive bid with seal bids from underwriters

• Compensation for the underwriter
• - manager's fee 10-20%
• - underwriting fee 20-30%
• -selling concessions 50-60%

• Appoints originating underwriter as the managing underwriter
• Assigns proportional liabilities among underwriters
• Authorizes the manger TI allocate a portion of the issue to a selling group

• Broker dealers tasked with selling the IPO
• Selected Dealer Agreement
• No financial responsibility for unused portion

Underwriting fee + selling concession

• Stipulates the terms for selling group
• Members could be non - FINRA firms such as banks etc

Illegal act of allocating some of the IPO shares to executives of companies as favors to get their future business

• Buying other shares from an investor so that he can invest in the IPO shares
• Only legal if shares purchased at market price

• - fixed pot arrangement - predetermined and fixed compensation among underwriters
• - jump ball pot arrangement- credits go to those with first come first served,each underwriter competes

Issuer has the right to redeem it prior to it's maturity date; includes a call premium, maybe called when interest rates are lower; may include a call protection which a period of time for no calls; incurs reinvestment risk

When an issuer calls a callable bond, the investor faces reinvesting challenge since interest rates are lower

Fghvc

• Also called additional paid in capital,
• Capital raised in excess of par value of the stock

Considered financing activity in the cash-flow statement

Share price * fully diluted shares outstanding

= basic shares outstanding + exercisable "in the money" stock options and warrants + "in the money" convertible securities

10 days prior to the filing of definitive Proxy being sent to shareholders

20 days before the shareholder mtg is held

Definitive proxy statements files with SEC and set to shareholders prior to shareholder meetings

Borrower to maintain its credit profile in accordance with financial projections it presents to lenders during syndication

Main office and regional offices, at least 1 registered principal per OSJ

Branch offices that supervise non- branch offices once a year, but other branch offices once 3 years

regulates and requires the registrations of exchanges, broker-dealers and their representatives, and other participants in the secondary market

Measures bonds sensitivity to changes in interest rates

Enacted to prevent manipulative conduct by person with an interest in the outcome of an offering of securities, including underwriters, işsizde, And selling Security holders

• Rule 101 - for distribution participants eg underwriters
• Rule 102- for issuers and selling security holders,

Average Daily Trading volume

• Confirms that securities offered offshore are not subject to registration requirements;
• Can be resold to a US person only after 1 yr for equities and after 40 days for debt securities

Defines how the securities acquired thru an exempt transaction or restricted securities can be re-sold

Those acquired in unregistered private sales, eg private placements, Reg D offerings, Reg S offerings, employee stock benefits, etc

Min 6 months for companies subject to reporting requirements, 1 year for others

Securities held by corporate insiders, also called affiliates, ie officers of the company,member of the board, individuals owning at least 10% of the shares

• Greater of
• 1) 1% of the outstanding shares
• 2) average weekly trading volume during the last 4 weeks

Used by affiliates / insiders yo indicate to give notice to sell control stocks

Prohibit from attending roadshows, communicating with customers in the presence of investment bankers

To prevent manipulative conduct during the offering of securities

Restrict the activities by underwrites and other persons who are participating in the distribution of the securities

Restrict the activities of issuer or selling shareholders

• Allows broker dealers to engage in passive market making transactions in Nasdaq securities
• Can bid at most the highest independent bid, also have volume limitations during restricted period

Can not exceed 30% of the market makers daily trading volume during 2 month prior

Rules for stabilization of the security during an offering, also involves penalty bids

To prevent a decline in the market price, but not to manipulate a higher price

Must be planed ahead and announced ahead

Imposed by lead manager to syndicate member if securities allotted to him are 'flipped'

Prevents Short selling during restricted period for most of the transactions

Can spend only up to 15% on organization and offering (O&O) expenses

• Regulatory element and
• Firm element

All registered individuals to take within 120 days of the 2nd anniversary of registration and every 3 years thereafter

• Compliance
• Regulatory standard
• Ethical standards
• Sales practices
• Supervisory standards

Individuals who do not satisfy Regulatory Element requirement become CE Inactive, can stay up to 2 yrs as CE inactive; beyond that must be terminated and must pass exams to qualify.

Broker dealer establishes a formal training program to keep employees up to date on industry

• Normal - longer term bonds have higher yield
• Inverted - longer term bonds have lower yield
• Humped / flat - long and short term bonds have similar yields

The time between the registration of an offering until SEC declares the registration effective

• Limited communication and promotion,
• Preliminary prospectus / red herring
• Roadshow
• Free Writing Prospectus

Preliminary prospectus

• 1. Pre-filing period
• 2. Cooling-off period
• 3. Post effective period

Material Adverse Change

Stipulates the terms for the selling group who is allocated portion of the issue, but take no financial responsibility for unsold portion

Filed with SEC for acquiring 5% of shares of public company,within 10 days

3 years

CEO Making positive predictions during the quiet period

Exempt securities offered less than $5M in 12 months; simple procedure, offering circular, no need for audited financials

Vote all your shares for each director

If two directors are to be elected, you have two times your shares to allocate whichever director you want or split it

Hedge funds

Liabilities + Shareholders equity

Private Placement

Intrastate offering

If not affiliated for 3 months and if held stock for 1 year

Filing with SEC if acquiring 5% of public company within 10 days

• Rule 504 - up to $1m
• Rule 505 - up to$5m
• Rule 506 - more than $5m

Sale to unlimited number of accredited investors and up to 35 non-accredited investors

• - person with net worth more than $1m
• - person income exceeding $200k per year or $300k with spouse
• - banks, insurance, investment companies
• - officers of issuer

Sophisticated investors who possess sufficient knowledge and experience in financial and business matters

Sophisticated investors

Purchaser representatives

• Not associated with issuers,
• Subject to conflict of interest disclosures,
• Must have written documentation between investor and purchaser rep

• - well known seasoned issuers
• - seasoned issuers
• - unseasoned issuers
• - ineligible issuers
• - non reporting issuers

Subject to SEC reporting but cannot use S-3

=risk free rate + beta*risk premium

=S&P rate - risk free rate

• After tax cost of debt * % of debt in cap structure
• + cost of equity * % of equity in cap structure

Debt rate * (1 - effective tax rate)

Allows issuer to preregister in order to sell as soon as the market is favorable

WKSIs can file shelf registration that becomes automatically effective without prior review; this would be valid for 3 years; during this time, the issuer can 'refresh'

Valid for 3 years and 180 days; issuer can re-register which starts the clock again

• First inform audit committee or board of directors
• If no remedy, issue report to board
• Board must send the report to SEC in 1 day and copy auditor
• If board does not act, auditor resigns and sends report to SEC

• Implicit exception: oral communications
• Explicit exception: written material sent in conjunction with the prospectus

Permitted only after registration, except WKSIs can send FWP any time, ie before or after registration

For Non-WKSIs stating that they shd read the prospectus that was filed with registration

Permits to trade unregistered securities between parties as long as they are QIBs, qualified institutional buyers

Institutions with over $100m in portfolio, or brisker dealers that have $10m portfolio

For trading rule 144a transactions only between QIBs

When issuer registers their previously unregistered equities, piggyback registration allows investors to demand to have their equity to be registered as part of the issuers fegsitration