Equity Finance, Flotations & Takeovers

1 Day In-House Training Course

This 1-day in-house training course is a thorough introduction to raising finance on the capital markets. Equity instruments and restructuring strategies are discussed in relation to flotations and the subsequent equity financing of public companies. The roles of advisors are described together with the relevant regulatory requirements.

point of view of the offeror and the offeree and the principal rules of the Takeover Code are explained. In respect of all these activities the purpose and objectives of corporate governance is clarified.

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Course Outline

  • Equity Capital

    • Dividing the Share Capital – ordinary shares & preference shares
    • Altering the Share Capital – bonus issues & share splits
    • Increasing the Share Capital – convertible loan stocks, options & warrants
    • Reducing the Share Capital – share buybacks, rules for reduction of capital

  • Stock Market Flotations

    • The Regulatory Framework – key Purple Book listing rules, AIM and the EUPD
    • Suitability for Flotation – fundamental, market related & business related questions
    • Methods of Flotation – offer for sale, offer for subscription, placing and/or introduction
    • Stabilisation & the Greenshoe Option – legalised market rigging
    • ADRs & GDRs – separation of the legal and commercial risks on foreign equities
    • Substantial Transactions – the class tests
    • Flotation Advantages and Disadvantages – financing growth vs. greater accountability
    • Issuing Further Equity – rights issues, open offers & vendor placings
    • Key Players – investment bankers, stockbrokers, accountants & solicitors
    • Selecting the Lead Manager – essential criteria for choosing an investment bank
    • The Lead Bank’s Initial Decisions – pricing, underwriting, marketing & allocation
    • The Lead Bank as Co-ordinator – orchestrating, grooming & transaction management
    • Marketing – developing the investment case, the roadshow & follow up
    • Reports – Long Form & Short Form reports, board & working capital memoranda
    • Verification Notes – reducing the potential liability of the directors

  • Public Company Takeovers

    • The City Code on Takeovers & Mergers – when does the Code apply?
    • The Blue Book – 6 General Principles & 38 Rules supported by Practice Notes
    • Objectives – equality, sufficient information & no false markets or frustration
    • Nature of Takeovers – friendly, hostile or contested
    • Types of Consideration – paper, underwritten cash alternatives, mix & match elections
    • Hostile Bid Tactics – timing, pricing, gathering support
    • Defence Strategies – the best method of defence is attack
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Course Notes, Slides and Exercises

Participants will receive a booklet containing copies of 16 slides and 70 pages of very comprehensive notes. Each slide will cover a number of related topics and the accompanying notes will support the content of the course to be delivered by the trainer.

During the course of the day, participants will undertake one or two exercises (problems) in groups of two or three (depending on the size of the class) which will involve considering what advice should be given to a client in particular circumstances. Participants will discuss the exercise with each other and then with the trainer and will receive a written answer to the problem.

Exercise 1

Your client considers that its share price is too low to permit a rights issue and so decides to raise funds by way of convertible loan stock. You calculate the conversion price, the conversion ratio, the conversion value and the conversion premium.

Exercise 2

Your client’s stockbrokers have agreed to underwrite a rights issue at a 20 per cent. discount. You calculate how many shares will need to be issued to raise the required funds, compute the theoretical ex-rights price and comment on how shareholders can deal with their rights.

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