Some goof sent me an anonymous e-mail,..
"Wrong!ÿ Reg S is almost always last ditch financing.
No reputable, large corp would do it.ÿ Please post an
example.ÿ Reg S is used by companies that can't get
anything better.ÿ A large, reputable company could easily
get other, non dilutive financing rapidly.ÿ Reg S is
almost always a sign of a company in bad trouble or
a company of such high risk that they can't obtain
anything better. "
I have never seen such a dumb fool letter. Why do you think the SEC made the rule?
It replaced the 'no action letter', circa 1961, when you asked the SEC about a foreign financing.
In 1991 reg S as we know it came into being, with the 40 day trade limits. Recently they introduced a 15 day notification period.
The first Company was Alberto-Culver, IBM has done them, General motors did a large factory financing in Indonesia with one, Amoco did a monster.
It is made to get money from foreigners quickly. As you know a prospectus can take 6 months or more. Needing money quicklly can be from danger, or an opportunity that needs fast money to buy, and cannot tolerate a 6 month wait. Withco-operation from all involved a reg S deal can be done in 1 day. In essence you agree on how many shares, at what discount, with a 40 day hold, place the shares in escrow, and place the money in escrow, and the escrow agent gives the shares to the foreigner and the money to you. Of course US persons and corporations cannot buy them(not even beneficially). And after the 40 days they are presnted for trading at the Transfer Agent for the stock. They may sell, they may not, as they often are good high tech companies, some not so good. Check ZITL. It went well. Check AURA, it did not.
I had zero to do with those reg S deals. I just heard about them from others.
In fact US person often buy unbeknownst to anyone via offshore corporations. When they do they can short in the USA and cover after 40 days and lock in a profit. But if the SEC gets them they must cough up all the profits.
Look up this place sec.gov and hunt up reg S
Bill |
