Drafting Preferred Stock Provisions and Expected Developments in the New Environment

Structuring Liquidation and Distribution Preferences, Conversion Rights, Anti-Dilution Protection, and Tax Provisions

Note: CPE credit is not offered on this program

Recording of a 90-minute premium CLE webinar with Q&A


Conducted on Thursday, May 14, 2020

Recorded event now available

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Program Materials

This CLE webinar will discuss the risks and benefits of preferred stock, as well as expected developments in light of the changing market landscape. The program will discuss drafting and other considerations.

Description

Preferred stock provides investors two key benefits: a liquidation preference over common stock if the company is sold or liquidates and, if convertible, the right to convert into common stock if the company's value increases significantly. Preferred stock provides companies with two key benefits: raising capital in a challenging environment and issuing a debt-like instrument with equity-like treatment.

Key stock provisions include liquidation preferences, conversions, and anti-dilution protection. The issuer must also consider tax and accounting considerations. Drafters of stock provisions must be precise and clear in setting forth rights, powers, and preferences.

Listen as our authoritative panel of practitioners analyzes the pros and cons and features of convertible preferred stock. The program will cover drafting considerations and essential terms for these arrangements, tax issues for investors, employees, and companies, and new issues presented by the current economic environment.

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Outline

  1. Preferred stock--pros and cons
  2. Key structuring characteristics
    1. Participating vs. nonparticipating
    2. Capped or not
    3. Board seats
    4. Negative covenants
    5. Tag-along and drag-along rights
    6. Preemptive rights
    7. Redemption rights

Benefits

The panel will review these and other key issues:

  • What are the benefits and risks for investors in acquiring preferred stock?
  • What are the risks and benefits for companies issuing preferred stock?
  • What are the critical considerations in drafting preferred stock provisions?
  • What new developments are expected in light of the depressed market conditions?
  • What are the tax and accounting considerations?

Faculty

Holmes, Hillary
Hillary H. Holmes

Partner
Gibson, Dunn & Crutcher

Ms. Holmes is a partner in the Houston office of Gibson, Dunn & Crutcher, Co-Chair of the firm’s Capital...  |  Read More

Scarazzo, Eric
Eric M. Scarazzo

Of Counsel
Gibson, Dunn & Crutcher

As a key member of the firm’s Capital Markets Practice, Mr. Scarazzo is involved in some of the firm’s most...  |  Read More

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