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Capital Markets Law Journal Advance Access originally published online on June 9, 2009
Capital Markets Law Journal 2009 4(3):290-310; doi:10.1093/cmlj/kmp013
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© The Author (2009). Published by Oxford University Press. All rights reserved. For Permissions, please email: journals.permissions@oxfordjournals.org

The resurgence of United States at-the-market equity offerings to raise capital in volatile equity markets

James D. Small, III, W. Clayton Johnson and Leslie N. Silverman*
* James D. Small III is a counsel of Cleary Gottlieb Steen & Hamilton LLP based in New York, W. Clayton Johnson is a partner of Cleary Gottlieb based in Hong Kong, and Leslie N. Silverman is a partner of Cleary Gottlieb based in New York. The authors gratefully acknowledge the assistance of Xiaoxu Luo, an associate in Cleary Gottlieb's Beijing office. The views expressed in this article are those of the authors, and not necessarily those of Cleary Gottlieb.

The first 150 words of the full text of this article appear below.


Key points

  • In recent months, the use of equity distribution programmes to make at-the-market sales of equity securities has become increasingly popular due to the volatile global equity market conditions, with more than $3.2 billion of equity securities sold pursuant to such programmes since June 2008.
  • For those issuers that are eligible to use them (which will include many shelf-eligible issuers), these programmes offer several advantages, including the ability to control the timing, amount and minimum sales price for any drawdown, while at the same time decreasing the market impact of such sales.
  • To take advantage of this flexibility, however, issuers will need to take steps beyond those typical in a traditional offering both to ensure that they are not in possession of material non-public information when sales are being made and to assist the sales agent in establishing a due diligence defence.
  • Both issuers and agents will need to . . . [Full Text of this Article]

 

   1. Introduction
 

   2. Overview
 

   3. History
 

   4. Documentation and process
 
4.1 Corporate authorization
4.2 Shelf registration statement
4.3 Prospectus
4.4 Sales agency/distribution agreement
4.5 Public announcements
4.6 Marketing
4.7 Sales orders
4.8 Settlement

   5. Issues of particular interest to issuers and agents
 
5.1 Due diligence and updating
5.2 Disclosure of proceeds
5.3 Prospectus delivery
5.4 Regulation M and other distribution-related concerns
5.5 Research publication
5.6 Conflict clearance and other internal procedures of the agent
5.7 Publicity
5.8 FINRA and other regulatory concerns
5.9 Additional concerns for foreign private issuers

   6. Alternatives to at-the-market offerings
 
6.1 Firm commitment underwriting
6.2 ‘Best efforts’ underwriting
6.3 Standby commitments
6.4 Forward contract alternative

   7. Conclusion
 

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