Get equity on the quiet

Author: | Published: 1 Jul 2009

Kyle Siskey
Staff writer

Rights offerings are the new equity alternative in the US.

While traditional stock market offerings spotlight weak US companies to public investors, non-traditional rights offerings bring another choice to companies needing to raise equity under the radar.

UK and European lawyers wonder why US companies are performing rights offerings when their model has failed too often. US regulators, unlike UK ones, are more likely to adapt to companies needs because of the disclosure a rights offering gives shareholders.

"The regime in the UK is very prescriptive and that can be limiting," said Anna Pinedo of Morrison & Foerster. "The US gives a lot more latitude. Therefore the rights offering format can be tailored to fit what the issuer needs to address. That makes the US rights offering more effective."

Meanwhile, lawyers are structuring these rights offerings for the first time and wondering what laws need to be met.