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Secondary Issues Chart Notes

This is a sample of our (approximately) 4 page long Secondary Issues Chart notes, which we sell as part of the Public Companies and Equity Finance Notes collection, a Distinction package written at Multiple Institutions in 2013 that contains (approximately) 165 page of notes across 52 different document.

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Secondary Issues Open Offer

Rights Issue Definitions

An offer to existing security holders to subscribe in proportion to their existing holdings made by the way of the issue of a renounceable letter

Invitation to existing shareholders not made by means of a renounceable letter so not tradable

Advantages

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Disadvantag es

Shareholdings are not diluted if accepted

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Lazy shareholders can be paid

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IPC support

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No limit on discount that can be offered

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Shareholders can sell the rights to buy in the PAL

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Can take a long time as notice period and offer period cannot run concurrently

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Costs as underwriting fees are high

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Shares at a discount can cause market value to fall

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May still want to dis-apply 561

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Cheaper for the company Shorter time period than for a rights issue as offer period can run concurrently with notice period

Not tradablecannot sell the rights to buy Lazy shareholders don't get money automatically May want to disapply 561 No more than 10% discount unless within exception - may be less attractive to shareholders IPCs prefer rights issues

Placing

Vendor Placing

An offer by the company to issue new shares and/or an offer by existing shareholders to transfer existing unlisted shares to specified persons or clients of any financial adviser assisting in the placing which does not involve an offer to the public or to existing holders of company's securities

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Might not need a prospectus and this could save costs

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Smaller group of people - less administration

An issue of new shares by the company to the seller of an asset or assets in consideration for the acquisition by the company of that asset or assets (NOT FOR CASH)

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Dilutes the holding Have to deal with pre-emption rights - disapply 561

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Pre-emption group statement restricting the number of shares at a discount

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Cheaper for company - limitation on discount Pre-emption rules don't apply

Valuation may be required by 593 if the asset acquired is other than shares

1) Why offer shares at a discount?
a. More attractive for existing shareholders to take up the offer b. There is no limit on the discount but must be above nominal value in accordance with the CA 2006 2) Commercial drivers behind a rights issue?
a. Pay of a debt b. Buy an asset c. Increase a bank balance d. Improve gearing that might enhance the company's ability to borrow 3) Risks of a rights issue?
a. Not all the shares may be taken up b. Potential reduction in share price c. Company might not pay dividends in the future d. No nil-paid rights may develop which can prevent shareholders trading them in the future 4) Timetable of a rights issue Date Application At the latest 10 working Draft Prospectus is submitted to FSA for approval days before Impact Day FSA will approve the Prospectus based on Listing Rules requirements (but probably well before) Day before Impact Day Board meeting to approve rights issue Underwriting agreement is signed and held in escrow

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