PIPE Transactions and Registered Direct Offerings: Alternative Capital Raising, PE Investment Opportunity

Issuer Requirements, Structuring Concerns, Key Terms and Negotiating Points

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


Conducted on Thursday, August 6, 2020

Recorded event now available

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Program Materials

This CLE webinar will examine the mechanics of traditional private investments in public equity (PIPEs) as well as registered direct offerings. The panel will discuss short-term advantages and follow-up obligations for issuers, key terms, and issues for investors to consider when engaging in these transactions.

Description

PIPEs and related transactions are gaining in popularity in the current market. They offer quick execution and access to capital because they are either exempt from registration under the Securities Act of 1933 or done as a "registered direct" transaction using an existing shelf registration. Given the need for quick access for capital and the difficulties of public reporting during the COVID-19 pandemic, PIPEs have become particularly attractive.

PIPEs provide hedge and private equity funds with an efficient way to make a substantial one-off investment in a public company and negotiate the terms of purchase. Key terms include pricing, deal structure and protective provisions, and possibly board seats and other control rights. Deal size may trigger shareholder approval requirements or SEC beneficial ownership reporting requirements; investors must analyze these issues when structuring the transaction.

Issuers might prefer to sell securities through a registered direct transaction, if a shelf registration is available, to avoid the need for future registration for resales (restricted securities are issued in PIPEs requiring a subsequent resale registration statement). Well known seasoned issuers, or WKSIs, may be able to file a new registration statement so they can immediately proceed with an offering. Counsel must fully understand the legal issues around registered direct transactions as well as the resale of PIPE securities.

Listen as our authoritative panel looks at market and legal trends in PIPEs and related transactions as a financing alternative. The panel will discuss issuer requirements and investor due diligence, PIPE terms, and negotiating points for both traditional and nontraditional PIPEs.

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Outline

  1. Pros and cons of PIPE transactions and strategic uses
  2. Issuer requirements and investor due diligence
  3. PIPE terms and negotiating points
  4. Registered direct transactions
  5. Other structuring considerations

Benefits

The panel will review these and other key issues:

  • What are the key advantages of PIPE transactions over a traditional offering of securities?
  • How has COVID-19 impacted public offerings of securities and the use of PIPEs as an alternative financing vehicle?
  • What are the essential terms and negotiating points for traditional PIPEs?
  • Why might a registered direct transaction be preferred over a standard PIPE transaction? Are there any additional registration requirements?

Faculty

Klein, Eleazer
Eleazer Klein

Partner
Schulte Roth & Zabel

Mr. Klein is co-chair of the firm’s global Shareholder Activism Group. He practices in the areas of shareholder...  |  Read More

Sichenzia, Gregory
Gregory Sichenzia

Partner
Sichenzia Ross Ference

Mr. Sichenzia counsels public and private companies in all securities laws matters, and he has also been...  |  Read More

Wood, Mark
Mark D. Wood

Partner
Katten Muchin Rosenman

Mr. Wood is head of his firm's securities practice and concentrates in corporate and securities law. He...  |  Read More

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