referencelibrarybanner
Listing Center Coronavirus FAQs for Nasdaq-listed Companies
Reference Library - Advanced Search
Find
 


Library 



 
Timeframe
Category
 
Sub-Category
** To make multiple selections, select the first criterion and then press and hold the Ctrl Key **
 
1- 1 of 1 Search Results for:
Libraries:   Staff Interpretation Letters
Filters:   All Years; Shareholder Approval;
 
Search   Clear


Expand All
Printer Friendly View
Mailto Link 
Page: 1 of 1
Frequently Asked Questions
  Staff Interpretation Letter 2007-33  
Identification Number 809
This is in response to your correspondence regarding whether the company’s issuance of common stock in a private placement (the “Private Placement”) would be deemed to be in connection with the acquisition of Target One for purposes of the applicability of Marketplace Listing Rule 4350(i)(1)(C)(ii) (the “Rule”).
 
Approximately one year ago, the company entered into an agreement to acquire Target One in exchange for cash (the “Cash Portion”) and shares of its common stock (the “Stock Portion”).  The company obtained required governmental consents and completed the Acquisition approximately seven months ago.  The Stock Portion was limited to 19.9% of the company’s pre-transaction total shares outstanding, and the Cash Portion was funded by cash on hand and a term loan (the “Loan”).  The Loan is not convertible into shares of the company’s common stock.  Prior to entering into the acquisition agreement, the company received a commitment letter from the Bank under which the Bank committed to provide the Loan.  Pursuant to the commitment, the company and the Bank entered into an agreement for the Loan on the date of the completion of the Acquisition.
 
Approximately eleven months ago, the company submitted a non-binding bid for Target Two, another potential acquisition target.  To fund the acquisition price, the company completed the Private Placement approximately eight months ago, immediately prior to submitting its final bid for Target Two.  Approximately ten days after the closing of the Private Placement, the company learned that its bid was not successful.
 
Currently, the company is considering using some or all of the proceeds of the Private Placement, which was conducted to partially fund the acquisition of Target Two, to repay all of or a portion of the Loan, the proceeds from which were used to partially fund the acquisition of Target One.
 
In your submission, you stated that: (i) the Private Placement was not conducted to raise funds to finance the acquisition of Target One; and (ii) the Bank provided a commitment for the Loan for the acquisition of Target One before the company’s board of directors considered the Private Placement for the acquisition of Target Two.  The company publicly represented that: (i) the source of the cash portion of the acquisition price for Target One was cash on hand and the Loan; and (ii) the Loan would be repaid through cash flows from operations.  The stated use of proceeds for the Private Placement included a reference to the acquisition of Target Two.  The company’s board approved the acquisition of Target One approximately four months before the Private Placement, which was to be used for the acquisition of Target Two.  You further stated that there were no contingencies between the Private Placement and the acquisition of Target One and that each would have taken place without regard to the other.  None of the owners of Target One invested in the Private Placement.
 
Following our review of the information you provided, we have determined that for purposes of the Rule, the Private Placement will not be deemed to be in connection with the acquisition of Target One.  Accordingly, the company may use the proceeds from the Private Placement to repay the Loan without causing the shares that were issued in the Private Placement to be considered under the Rule to be in connection with the acquisition of Target One.  We have reached this conclusion because: (i) the Private Placement was not conducted to raise funds for the acquisition of Target One; (ii) the Private Placement was not contemplated at the time the company’s Board approved the acquisition of Target One; (iii) the company had alternative long-term financing in place to fund the acquisition of Target One; and (iv) there were no contingencies between the Private Placement and the acquisition of Target One.
 
Publication Date*: 7/31/2012 Mailto Link Identification Number: 809
material_search_footer*The Publication Date reflects the date of first inclusion in the Reference Library, which was launched on July 31, 2012, or a subsequent update to the material. Material may have been previously available on a different Nasdaq web site.
Page: 1 of 1
home_footer_links
Copyright_statement
App Store       Google Play       Listing Center Content RSS Feed
The Nasdaq Stock Market, Nasdaq, The Nasdaq Global Select Market, The Nasdaq Global Market, The Nasdaq Capital Market, ExACT and Exchange Analysis and Compliance Tracking system are trademarks of Nasdaq, Inc.
FINRA® and Financial Industry Regulatory Authority, Inc.® are registered trademarks of Financial Industry Regulatory Authority, Inc. OTCBBTM and OTC Bulletin BoardTM are trademarks of FINRA