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On May 14, 2020, the New York Stock Exchange (the “NYSE”) adopted a temporary rule waiving until June 30, 2020 additional key shareholder approval requirements for certain private investments in public equity (“PIPE”) and similar transactions by companies impacted by COVID-19. The new waiver operates by creating a new “COVID-19 exception” to the so-called “20% rule” that is significantly broader than the existing “financial viability exception” and continues a trend of both major exchanges providing incremental additional flexibility to companies that require an immediate cash infusion to weather the COVID-19 pandemic. The new waiver is generally consistent with recent temporary…
On May 4, 2020, The Nasdaq Stock Market LLC (“Nasdaq”) adopted a temporary rule waiving until June 30, 2020 key shareholder approval requirements for certain private investments in public equity (“PIPE”) and similar transactions by companies impacted by COVID-19. The temporary waiver operates by creating a new “COVID-19 exception” to the so-called “20% rule” that is significantly broader than the existing “financial viability exception.” The temporary relief continues a trend of both major exchanges[1] providing incremental additional flexibility to companies that require an immediate cash infusion to weather the COVID-19 pandemic. Nasdaq’s 20% rule requires shareholder approval of PIPEs…
Recent market conditions and volatility due to the COVID-19 pandemic have produced an environment in which traditional securities offerings may prove challenging for public companies. At the same time, the global economic fallout resulting from the pandemic and the efforts to contain it may make raising equity capital all the more imperative or strategically important for certain public companies. This alert outlines four alternative equity offering types that public companies may consider in addressing their capital raising and liquidity needs. At-the-market offering programs At-the-market (ATM) offering programs are public offerings of equity securities into an existing market on a continuous…
In light of the significant liquidity challenges and deterioration in the stock prices and asset values the COVID-19 pandemic has caused for many otherwise healthy public companies, many of those same companies and investors are exploring rescue and recovery capital solutions that would not have been on their radar before. These solutions can involve a wide array of securities, ranging from plain vanilla common stock to bespoke convertible preferred stock and convertible debt, and a wide variety of transaction structures including PIPEs, backstopped rights offerings and registered direct offerings (sometimes known as public PIPEs) that can be executed with the…
SEC Approves Temporary Waiver of NYSE Shareholder Approval Rules to Provide Companies Additional Flexibility to Raise PIPE Financing On April 6, 2020, the Securities and Exchange Commission (the “SEC”) announced the approval and immediate effectiveness of a proposal from the New York Stock Exchange LLC (the “NYSE”) to temporarily waive certain shareholder approval requirements applicable to certain private investment in public equity (“PIPE”) transactions. During a time where listed companies may have urgent liquidity needs in the coming months due to lost revenues and maturing debt obligations, a PIPE can be a timely and efficient way for a public company…
On March 25, 2020, the U.S. Securities and Exchange Commission (“SEC” or “Commission”) announced an Order to provide further extensions for public company filing deadlines due to the COVID-19 pandemic. This Order supersedes and extends the Commission’s original Order dated March 4, 2020. For additional information on the original Order, see our previous client alert here. The original Order granted public companies an additional 45 days to file any periodic or current report due between March 1 and April 30, 2020. The March 25 Order extends that relief to any report due between March 1 and July 1, 2020.…
As the COVID-19 virus disrupts businesses, public companies face both operational and compliance challenges as public disclosure has become a more complex and evolving task. Companies with calendar year-ends are beginning to prepare their quarterly reports on Form 10-Q, and companies with other fiscal year-ends may be preparing annual reports on Form 10-K, or on Form 20-F in the case of foreign private issuers. This alert summarizes a few areas that companies should think about as they consider what disclosures are required, and what other disclosures it may be sensible to make voluntarily. The SEC staff just issued new guidance…
Exemptive Relief The Securities and Exchange Commission (SEC) has issued an order (Order) providing temporary exemptive relief to public companies that are unable to meet filing deadlines due to circumstances related to novel coronavirus (COVID-19). Companies that satisfy the conditions in the Order will have an additional 45 days to file certain disclosure reports, including quarterly reports on Form 10-Q, annual reports on Form 10-K, current reports on Form 8-K, and proxy statements. The time period for the relief is from March 1, 2020 to April 30, 2020. Conditions The exemptive relief is subject to a number of conditions outlined…