Q&As

What are the options for emergency equity fundraisings for listed companies in light of the coronavirus (COVID-19) pandemic?

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Published on LexisPSL on 07/04/2020

The following Corporate Q&A provides comprehensive and up to date legal information covering:

  • What are the options for emergency equity fundraisings for listed companies in light of the coronavirus (COVID-19) pandemic?
  • Placing
  • Cashbox placing
  • Rights issue
  • Open offer
  • Takeover Code implications
  • Fundraising by SSP Group plc

What are the options for emergency equity fundraisings for listed companies in light of the coronavirus (COVID-19) pandemic?

With the coronavirus (COVID-19) pandemic continuing to cause significant economic turmoil, many listed companies may need to raise funds quickly through equity capital fundraisings.

Equity fundraisings can be split into two different types: pre-emptive offerings and non-pre-emptive offerings. In a pre-emptive offering, such as a rights issue or an open offer, shareholders are given the opportunity to subscribe in the fundraising pro-rata to their existing shareholdings. In a non-pre-emptive offering, such as a placing, shares are offered to selected investors and this will see the holdings of existing shareholders in the company diluted.

The key types of secondary fundraisings which a listed company may consider in an emergency situation are discussed below.

Placing

In a placing, shares are usually offered to a selected group of institutional investors for cash. The placing is generally structured so that it falls within one of the exemptions from the requirement to publish a prospectus which saves time and cost. There is an exemption from the requirement to publish a prospectus in relation to an offer of shares to the public where shares are offered to qualified investors only or are offered to less than 150 persons. In addition, there is an exemption from the requirement for a prospectus for the admission of shares to a

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