Companies with stock listed on the Nasdaq Global Select Market are subject to the Nasdaq Marketplace Rules. Rule 5635 sets forth the circumstances under which shareholder approval is required prior to the issuance of securities in connection with various matters, including non-public offerings. In the case of private placements, Rule 5635(d) requires shareholder approval for the issuance of shares equal to 20 percent or more of the common stock or 20 percent or more of the voting power outstanding before the issuance for less than the greater of book or market value of the stock.
In April of 2010, BNC Bancorp, Inc. (SEC file no. 0-50128) and Intervest Bancshares Corp. (0-23377) filed definitive Proxy Statements (Forms DEF14A) seeking approval to issue shares in one or more non-public offerings although neither company had any firm plans with respect to a specific deal. The published interpretive guidance of Nasdaq indicates that, in those circumstances where a company has not obtained approval for a specific transaction, a general authorization will only be effective if it contains parameters specifying the maximum number of shares to be issued, the maximum dollar amount of any issuance, the maximum discount to market, and the duration of shareholder approval. BNC and Intervest each note that the proposals would enable them to raise capital in a timely and cost effective manner.
Ruth’s Hospitality Group, Inc. on 1/21/10 (0-51485) and First PacTrust Bancorp, Inc. on 9/17/10 (0-49806) also seek shareholder approval to issue shares under Nasdaq Rule 5635, but in connection with a securities purchase agreement and subscription agreements, respectively. Ruth's seeks to issue a new class of preferred shares to a private equity firm for $25 million in a transaction that would result in a change of control under applicable Rule 5635(b). First PacTrust proposes to raise approximately $60 million through a private placement to selected institutional and other accredited investors of common stock priced at a 37.5% premium to the closing price of the stock as of July 26. The primary purpose of the capital raise is to redeem preferred stock issued to the U.S. Treasury under the TARP Capital Purchase Program and to pursue growth opportunities.
In April of 2010, BNC Bancorp, Inc. (SEC file no. 0-50128) and Intervest Bancshares Corp. (0-23377) filed definitive Proxy Statements (Forms DEF14A) seeking approval to issue shares in one or more non-public offerings although neither company had any firm plans with respect to a specific deal. The published interpretive guidance of Nasdaq indicates that, in those circumstances where a company has not obtained approval for a specific transaction, a general authorization will only be effective if it contains parameters specifying the maximum number of shares to be issued, the maximum dollar amount of any issuance, the maximum discount to market, and the duration of shareholder approval. BNC and Intervest each note that the proposals would enable them to raise capital in a timely and cost effective manner.
Ruth’s Hospitality Group, Inc. on 1/21/10 (0-51485) and First PacTrust Bancorp, Inc. on 9/17/10 (0-49806) also seek shareholder approval to issue shares under Nasdaq Rule 5635, but in connection with a securities purchase agreement and subscription agreements, respectively. Ruth's seeks to issue a new class of preferred shares to a private equity firm for $25 million in a transaction that would result in a change of control under applicable Rule 5635(b). First PacTrust proposes to raise approximately $60 million through a private placement to selected institutional and other accredited investors of common stock priced at a 37.5% premium to the closing price of the stock as of July 26. The primary purpose of the capital raise is to redeem preferred stock issued to the U.S. Treasury under the TARP Capital Purchase Program and to pursue growth opportunities.
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