What happens when a companies stock is all bought up and no one wants to sell?
Monthly archive: September, 2009
China Initial Public Offering and China Trading Activities
Bernadine asks:
Initial public offering (IPO), also referred to simply as a “public offering”, is when a company issues common stock or shares to the public for the first time. They are often issued by smaller, younger companies seeking capital to expand, but can also be done by large privately-owned companies looking to become publicly traded. Generally, the company offers primary shares this way, although sometimes secondary shares are also sold as IPOs.
IPOs generally involve one or more investment banks as “underwriters.” The company offering its shares, called the “issuer,” enters a contract with a lead underwriter to sell its shares to the public. The underwriter then approaches investors with offers to sell these shares. Enter Dynasty Resources, a small company with big ambitions for reshaping the way China and the US do business.
An initial public offering (IPO) occurs when a company first sells common shares to investors in the public. Generally, the company offers primary shares this way, although sometimes secondary shares are also sold as IPOs. For a company to offer IPOs, they need to hire a corporate lawyer as well as an investment banker to underwrite the offer. The actual sale of the shares is generally offered by stock exchange or by regulators. When the company starts to offer IPOs, they are usually required to reveal financial information about the company so that investors know whether the companies a good investment or not.
China is now the fourth largest economy in the world. There was substantial growth in market capitalization and trading activities in most of the major markets. The China Initial public offerings flood, which saw many deals massively oversubscribed by frenzied investors, appeared to be a major achievement of China’s financial reforms, for the first time making the stock market an important source of funding for many companies. Please visit online http://www.dynastyresources.net in NewYork city.
Initial public offering (IPO), also referred to simply as a “public offering”, is when a company issues common stock or shares to the public for the first time. They are often issued by smaller, younger companies seeking capital to expand, but can also be done by large privately-owned companies looking to become publicly traded. Generally, the company offers primary shares this way, although sometimes secondary shares are also sold as IPOs.
IPOs generally involve one or more investment banks as “underwriters.” The company offering its shares, called the “issuer,” enters a contract with a lead underwriter to sell its shares to the public. The underwriter then approaches investors with offers to sell these shares. Enter Dynasty Resources, a small company with big ambitions for reshaping the way China and the US do business.
An initial public offering (IPO) occurs when a company first sells common shares to investors in the public. Generally, the company offers primary shares this way, although sometimes secondary shares are also sold as IPOs. For a company to offer IPOs, they need to hire a corporate lawyer as well as an investment banker to underwrite the offer. The actual sale of the shares is generally offered by stock exchange or by regulators. When the company starts to offer IPOs, they are usually required to reveal financial information about the company so that investors know whether the companies a good investment or not.
China is now the fourth largest economy in the world. There was substantial growth in market capitalization and trading activities in most of the major markets. The China Initial public offerings flood, which saw many deals massively oversubscribed by frenzied investors, appeared to be a major achievement of China’s financial reforms, for the first time making the stock market an important source of funding for many companies. Please visit online http://www.dynastyresources.net in NewYork city.
Rel Investors Worried Over Reliance Power Ipo; Adag Cries Foul
Isaura asks:
New Delhi, An association of investors in Anil Ambani-led
Reliance Energy today alleged that the planned IPO of Group Company
Reliance Power will erode the value for REL shareholders, but ADAG termed
it as a “vicious campaign” by vested industrial interests.
“A close study of draft prospectus reveals that the power generation
business opportunities secured in the name of REL and secured with the
strength of REL have been transformed to RPL by means of some internal
MoUs and understandings,” REL Investors Forum said in a faxed press
release.
“The shareholders of REL have been deprived of the entire power generation
business prospects to be accrued to them. By means of such a transfer of
business and creation of another shell company to issue public shares, now
the power generation profits will accrue to the new company in which Anil
Ambani holds 50 per cent.” Investors in REL are feeling cheated with ADA
group company RPL’s proposed public issue, it noted.
When contacted, REL Investors Forum Secretary ‘Veekay’, whose name was
mentioned on the release along with two other persons — Prakash Krishnan
and Anil Upadhyaya – said that the forum members include 60-70
shareholders of REL.
“We are looking at taking legal recourse to safeguard the interest of REL
shareholders,” Veekay said, adding the forum was also writing to other
shareholders to join the campaign.
However, a Reliance ADA Group spokesperson said in a statement, “Vicious
campaign of disinformation (is) underway by vicious industrial interests
to stall Reliance Power IPO.”
The spokesperson said attempts were underway to engineer motivated
litigation and the “campaign was motivated by frustration at continuing
success and rising valuation of ADA group”. Reliance Power’s IPO was
awaiting SEBI approval in normal course, the official added.
When asked to comment on ADAG’s view that the campaign was being promoted
by some vested industrial interests, the forum secretary denied any links
to any rival of the group.
“We have not been approached by any group… It’s just an initiative of
REL shareholders,” he said, when asked whether they have been contacted by
rivals.
The Reliance ADA group spokesperson said that forged letters by Members of
Parliament based on false and baseless allegations were also also part of
the vicious campaign.
The forum said in its press release that the new company being created had
no resources for executing projects and was dependent on REL for
technical, manpower and commissioning support as well as for guarantees
for raising finances.
“The Anil Ambani group is planning to charge a huge premium from the
public for the Reliance Power shares, but ADAG’s investment companies and
REL have been alloted 210 crore shares at face value of Rs 2 per share and
only 16 crore shares will be alloted to the promoters at the same price as
the public,” it added.
Reliance Power proposes to come out with an IPO of 160 crore shares to
part fund 12 power projects envisaging an investment of nearly Rs 100,000
crore. The IPO is being pegged as the biggest ever in India with a total
estimated proceed of about Rs 12,000 crore.
New Delhi, An association of investors in Anil Ambani-led
Reliance Energy today alleged that the planned IPO of Group Company
Reliance Power will erode the value for REL shareholders, but ADAG termed
it as a “vicious campaign” by vested industrial interests.
“A close study of draft prospectus reveals that the power generation
business opportunities secured in the name of REL and secured with the
strength of REL have been transformed to RPL by means of some internal
MoUs and understandings,” REL Investors Forum said in a faxed press
release.
“The shareholders of REL have been deprived of the entire power generation
business prospects to be accrued to them. By means of such a transfer of
business and creation of another shell company to issue public shares, now
the power generation profits will accrue to the new company in which Anil
Ambani holds 50 per cent.” Investors in REL are feeling cheated with ADA
group company RPL’s proposed public issue, it noted.
When contacted, REL Investors Forum Secretary ‘Veekay’, whose name was
mentioned on the release along with two other persons — Prakash Krishnan
and Anil Upadhyaya – said that the forum members include 60-70
shareholders of REL.
“We are looking at taking legal recourse to safeguard the interest of REL
shareholders,” Veekay said, adding the forum was also writing to other
shareholders to join the campaign.
However, a Reliance ADA Group spokesperson said in a statement, “Vicious
campaign of disinformation (is) underway by vicious industrial interests
to stall Reliance Power IPO.”
The spokesperson said attempts were underway to engineer motivated
litigation and the “campaign was motivated by frustration at continuing
success and rising valuation of ADA group”. Reliance Power’s IPO was
awaiting SEBI approval in normal course, the official added.
When asked to comment on ADAG’s view that the campaign was being promoted
by some vested industrial interests, the forum secretary denied any links
to any rival of the group.
“We have not been approached by any group… It’s just an initiative of
REL shareholders,” he said, when asked whether they have been contacted by
rivals.
The Reliance ADA group spokesperson said that forged letters by Members of
Parliament based on false and baseless allegations were also also part of
the vicious campaign.
The forum said in its press release that the new company being created had
no resources for executing projects and was dependent on REL for
technical, manpower and commissioning support as well as for guarantees
for raising finances.
“The Anil Ambani group is planning to charge a huge premium from the
public for the Reliance Power shares, but ADAG’s investment companies and
REL have been alloted 210 crore shares at face value of Rs 2 per share and
only 16 crore shares will be alloted to the promoters at the same price as
the public,” it added.
Reliance Power proposes to come out with an IPO of 160 crore shares to
part fund 12 power projects envisaging an investment of nearly Rs 100,000
crore. The IPO is being pegged as the biggest ever in India with a total
estimated proceed of about Rs 12,000 crore.
When I buy a stock, how does the money get to the company, if it does at all?
Eura asks:
As I understood it, when a company goes public they do their IPO. The underwriter pays the company in full for the shares. Then the underwriter releases the shares into the market. So the brokers get it and then the individual investors get it. Is this how it works? It would seem the money stops at the underwriter.
As I understood it, when a company goes public they do their IPO. The underwriter pays the company in full for the shares. Then the underwriter releases the shares into the market. So the brokers get it and then the individual investors get it. Is this how it works? It would seem the money stops at the underwriter.
Yuri Rutman Addresses Structured Finance in Film for Angel Investors,hedge Funds,real Estate Developers,tax Attorneys,& Private Equity Groups
Gertrud asks:
A quiet trend has been emerging as billionaires and other high net worth Angel Investors and Family Offices from Wall Street To Silicon Valley To the Middle East have been parking their money into Hollywood.
Larry Ellison Of Oracle, Paul Allen Of Microsoft, Steven Rales, Fred Smith of Federal Express, Norman Waitt, the Co-Founder of Gateway Computers, Jeff Skoll Of Ebay, Marc Turtletaub of The Money Store, Roger Marino Of EMC Corp, Sidney Kimmel Of Jones Apparel Group, Minnesota Twins owner Bill Pohlad; Real Estate Developers Tom Rosenberg and Bob Yari, and, financiers Sheikh Waleed Al Ibrahim and Philip Anschutz are all behind the finance of a lot of films that range from box office hits to Academy Award winners.
And the question remains “why?”
While the glamour of the movie business may be appealing to most, at the end of the day, it is still an unknown business that many try to gamble on, and only a handful come out as winners. The real key is to minimize risk, maximize profits, and offer a steadier stream of revenues than what other alternative investments may offer such as real estate, oil & gas, commodities, as well as risky hedge funds.
Well one Chicago/L.A. based media finance Company is taking a different approach in presenting its entertainment opportunities to the super rich as well as private equity groups. Instead of dazzling investors with smoke and mirror Monte Carlo simulation models that offer various IRR’s and scenarios based on unpredictable film revenues streams, it is offering an absolute return on investment using public tax incentives that in certain instances can guarantee 100% or more of invested capital prior to revenues.
Noci Pictures Entertainment is putting together a slate of films using an innovative hybrid public-private finance strategy aimed at investors who want to take a 100% Federal deduction against their ordinary income, get an additional 20-40% in state tax credits or cash rebates, have a hedge of revenues from 20-30 films, a possible exit IPO on the London AIM., as well as stimulating local economic development, and creating jobs, including for women and minorities. Oh, and the company’s team includes the former Vice Chairman Of A Major Film Studio.
Sound too good to be true?
“I don’t know of any other alternative investment that can offer tax incentives, multiple exit strategies, as well as giving back to the local economy, while being involved with the moviemaking process”, states Yuri Rutman, the head of Noci Pictures. “That would also add to the long line of recent film funds that have been structured with numerous hedge funds, private equity investors, corporate tax credit buyers, and institutions. Heck I don’t even know of any business that someone can start where they know they will receive an exact ROI before they see any profits”.
”I am also surprised how many investors, hedge funds, VC, tax planners, CPA’s, tax attorneys, public and private companies have no clue about these benefits”, Rutman adds. “Federal Preservation, New Markets Tax Credits, etc was the usual route for tax credit planning or alternative investments , but film production incentives offer a more liquid premium, equity, as well as little Hollywood adventure and schmoozing with movie stars.”
Rutman adds “Plus, I am reinventing ‘conscious’ film finance. A lot of competitor deals won’t be around in a few years because they didn’t do their homework. I want to be making movies when I am 90”.
A quiet trend has been emerging as billionaires and other high net worth Angel Investors and Family Offices from Wall Street To Silicon Valley To the Middle East have been parking their money into Hollywood.
Larry Ellison Of Oracle, Paul Allen Of Microsoft, Steven Rales, Fred Smith of Federal Express, Norman Waitt, the Co-Founder of Gateway Computers, Jeff Skoll Of Ebay, Marc Turtletaub of The Money Store, Roger Marino Of EMC Corp, Sidney Kimmel Of Jones Apparel Group, Minnesota Twins owner Bill Pohlad; Real Estate Developers Tom Rosenberg and Bob Yari, and, financiers Sheikh Waleed Al Ibrahim and Philip Anschutz are all behind the finance of a lot of films that range from box office hits to Academy Award winners.
And the question remains “why?”
While the glamour of the movie business may be appealing to most, at the end of the day, it is still an unknown business that many try to gamble on, and only a handful come out as winners. The real key is to minimize risk, maximize profits, and offer a steadier stream of revenues than what other alternative investments may offer such as real estate, oil & gas, commodities, as well as risky hedge funds.
Well one Chicago/L.A. based media finance Company is taking a different approach in presenting its entertainment opportunities to the super rich as well as private equity groups. Instead of dazzling investors with smoke and mirror Monte Carlo simulation models that offer various IRR’s and scenarios based on unpredictable film revenues streams, it is offering an absolute return on investment using public tax incentives that in certain instances can guarantee 100% or more of invested capital prior to revenues.
Noci Pictures Entertainment is putting together a slate of films using an innovative hybrid public-private finance strategy aimed at investors who want to take a 100% Federal deduction against their ordinary income, get an additional 20-40% in state tax credits or cash rebates, have a hedge of revenues from 20-30 films, a possible exit IPO on the London AIM., as well as stimulating local economic development, and creating jobs, including for women and minorities. Oh, and the company’s team includes the former Vice Chairman Of A Major Film Studio.
Sound too good to be true?
“I don’t know of any other alternative investment that can offer tax incentives, multiple exit strategies, as well as giving back to the local economy, while being involved with the moviemaking process”, states Yuri Rutman, the head of Noci Pictures. “That would also add to the long line of recent film funds that have been structured with numerous hedge funds, private equity investors, corporate tax credit buyers, and institutions. Heck I don’t even know of any business that someone can start where they know they will receive an exact ROI before they see any profits”.
”I am also surprised how many investors, hedge funds, VC, tax planners, CPA’s, tax attorneys, public and private companies have no clue about these benefits”, Rutman adds. “Federal Preservation, New Markets Tax Credits, etc was the usual route for tax credit planning or alternative investments , but film production incentives offer a more liquid premium, equity, as well as little Hollywood adventure and schmoozing with movie stars.”
Rutman adds “Plus, I am reinventing ‘conscious’ film finance. A lot of competitor deals won’t be around in a few years because they didn’t do their homework. I want to be making movies when I am 90”.
What Shareholder’s Agreement Gives You?
Loma asks:
Shareholders agreement becomes necessary when the rights and duties of shareholders prescribed by the law and other regulations are thought to be insufficient. In fact, in a limited company, each share carries a prescribed number of votes. As a rule, all the shares are of the same class known as ordinary shares. All these ordinary shares carry one vote each. That clearly shows that the majority shareholders control the company.
When such is the case, shareholders of many companies do not remain happy with the traditional rules and regulations. Instead, they like to use a shareholders agreement, which provides a more equal distribution of power and ensures protection for the minority against the exploitation of the majority of shareholders.
Shareholders agreement grants a few rights to the concerned party. They are: the option to put their stakes to their partners or to call their parents stakes, in part or in whole, at a strike price that is typically equal to ‘fair’ value. It also allows the parties, tag-along rights or co-sale agreements. This enables the parties to demand of a trade buyer to buy their partners’ stakes in the same way their partner can.
Then shareholders agreement provides drag-along right. It allows the parties to force their partners to join them in selling their stakes to a trade buyer in case of a trade sale. In addition to that it sanctions demand rights or registration rights that allows the parties to force their partners to agree to take the firm public in an IPO. The next right is the piggy-back; it allows the parties to demand to be included in an IPO in proportion to their stakes in the organisation.
shareholder agreement also provides catch-up clauses; its purpose is to maintain the parties’ claims to part of the pay off from a trade sale or an IPO when the parties have ceded their stakes to their partners following the partner’s exercise of a call option. These are, in short, the rights allowed to the parties by Shareholders agreement.
Shareholders agreement becomes necessary when the rights and duties of shareholders prescribed by the law and other regulations are thought to be insufficient. In fact, in a limited company, each share carries a prescribed number of votes. As a rule, all the shares are of the same class known as ordinary shares. All these ordinary shares carry one vote each. That clearly shows that the majority shareholders control the company.
When such is the case, shareholders of many companies do not remain happy with the traditional rules and regulations. Instead, they like to use a shareholders agreement, which provides a more equal distribution of power and ensures protection for the minority against the exploitation of the majority of shareholders.
Shareholders agreement grants a few rights to the concerned party. They are: the option to put their stakes to their partners or to call their parents stakes, in part or in whole, at a strike price that is typically equal to ‘fair’ value. It also allows the parties, tag-along rights or co-sale agreements. This enables the parties to demand of a trade buyer to buy their partners’ stakes in the same way their partner can.
Then shareholders agreement provides drag-along right. It allows the parties to force their partners to join them in selling their stakes to a trade buyer in case of a trade sale. In addition to that it sanctions demand rights or registration rights that allows the parties to force their partners to agree to take the firm public in an IPO. The next right is the piggy-back; it allows the parties to demand to be included in an IPO in proportion to their stakes in the organisation.
shareholder agreement also provides catch-up clauses; its purpose is to maintain the parties’ claims to part of the pay off from a trade sale or an IPO when the parties have ceded their stakes to their partners following the partner’s exercise of a call option. These are, in short, the rights allowed to the parties by Shareholders agreement.
