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Technology Stocks : Amazon.com, Inc. (AMZN)
AMZN 230.81-0.7%3:59 PM EST
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To: ROLF SCHMITZ who wrote (4052)5/6/1998 4:59:00 PM
From: Eric Klein  Read Replies (1) of 164684
 
Amazon.com (NYSE:AMZN - news) took its first baby steps into the big, scary world of high-yield
bonds yesterday by way of a so-called private placement. Yes, dear Fools, this column will digress
from the wonderful world of stocks for a spell in order to hopefully shed some light on a subject not
often addressed in this forum -- namely, the bond market. Bear with me, as I will endeavor to make this
often arcane subject as interesting as possible.

Amazon's private placement is also called a Rule 144A offering, in reference to the Securities and
Exchange Commission (SEC) regulation that made this type of financing possible about eight years
ago. The rule allows companies to sell securities (usually bonds) to "qualified" buyers such as pension
funds, mutual funds, and other institutional investors managing at least $100 million in assets. The
securities are not registered with the SEC in a formal prospectus. However, the company (or issuer)
has the right to register them at a later date, usually three to six months off. Bypassing the lengthy
registration process gives the company quick access to capital while also permitting it to take
advantage of a sudden change in interest rates.

fool.yahoo.com
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