Series 79 (M+A, Tender Offers, And Financial Restr
Series 79 (M+A, Tender Offers, and Financial Restr
Exam (elaborations)
Series 79 (M+A, Tender Offers, and Financial Restructuring) || with 100% Correct Answers.
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Series 79 (M+A, Tender Offers, and Financial Restr
Institution
Series 79 (M+A, Tender Offers, And Financial Restr
Section 338(h)(10) Election correct answers - Refers to part of the tax code which allows a stock sale to be treated as an asset sale for tax purposes
--> Debtor or trustee files w/ court
--> BUYER BENEFITS by being able to increase the value of the target's assets to their fair value rath...
Series 79 (M+A, Tender Offers, and Financial
Restructuring) || with 100% Correct Answers.
Section 338(h)(10) Election correct answers - Refers to part of the tax code which allows a stock
sale to be treated as an asset sale for tax purposes
--> Debtor or trustee files w/ court
--> BUYER BENEFITS by being able to increase the value of the target's assets to their fair
value rather than using their book value (purchaser will pay lower tax when assets are sold)
- Seller pays tax on the difference b/t book value and fair value of assets --> SELLER
USUALLY DEMANDS A PREMIUM to compensate
Foreign Corrupt Practices Act (FCPA) correct answers -Prohibits corrupt or improper payments
to foreign government officials for purpose of obtaining business
- Notify DOJ and SEC if discovered
-Also checklist maintained by Treasury Department Office of Foreign Assets Control (OFAC)
--> All transactions must be blocked and law enforcement notified WITHIN 10 BUSINESS
DAYS if entity is on the list (i.e. Cuba, Iran, etc.)
Schedule 14D-9 correct answers Filed by the Issuer, includes recommendations or solicitations
related to an outstanding tender offer (essentially the target's official stance on the offer)
Tender Offer Rules correct answers -Must be kept open for 20 BUSINESS DAYS
-If altered must remain open for 10 business days from alteration
-Cannot purchase same security or convertible in the open market for the duration of the tender
-Subject company must notify and advise shareholders w/in 10 BUSINESS DAYS.
- In order to extend offer, buyer must make a public announcement no later than the earlier of
9:00AM ET or opening of exchange
SEC Rule 14e-3 correct answers Prohibits a person from trading while in possession of insider
information about a tender offer
SEC Rule 14e-5 correct answers Prohibits short tendering of stock
SEC Rule 14d-10 correct answers All shareholders must be offered same tender price regardless
of their ownership position (exception is "best price rule")
14A Proxy Statement correct answers - Proxy statement related to mergers and acquisition
activity
- Regardless of cash or stock offer, target files 14A for both preliminary and definitive proxy
statements
SEC Rule 135 correct answers Provides a SAFE HARBOR for certain LIMITED
ANNOUNCEMENT regarding a proposed public offering or business combination
, SEC Rule 145 correct answers - Applies to situation in which securities are being offered as a
result of a business combination (i.e. restructuring, spin off, split off)
- Requires S-4 Registration
SEC Rule 165 correct answers -Written communications are permitted once a public
announcement has been made regarding a business combination; ie press releases must be filed
with the SEC
--> These are referred to as Form 425 Filings
When is S-4 required in a merger? correct answers -When securities are issued in connection
with the merger.
- Form is a great source of info regarding the cash/and or stock that the shareholders will receive
from the acquirer
Hart-Scott-Rodino Act (HSR) correct answers - A federal antitrust act that requires certain
parties to file notice w/ Federal Trade Committee and the Antitrust Division of the Justice
Department before a large deal is complete
- Minimum transaction to be notified is $50,000,000
- Merger may not be completed until 30 days after the notice is filed (15 days for cash
transaction)
Trust Indenture Act of 1939 correct answers Federal law requiring all corporate bonds to be
issued under an INDENTURE agreement approved by the SEC and providing for the
appointment of a qualified trustee free of conflict of interest with the issuer. The Act provides
that indentures contain protective clauses for bondholders.
Recovering Funds - Chapter 11 Bankruptcy correct answers An unsecured creditor is not
required to file a proof of claim in order to recover funds unless the debtor does not list them in
its Schedule of Liabilities
Recovering Funds - Chapter 7 Bankruptcy correct answers Both unsecured creditors and equity
holders must file a proof of claim in a timely manner in order to recover funds (90 DAYS after
the first date set for the meeting of creditors)
Ch. 11 Bankruptcy Process correct answers 1. DIP files the reorganization plan within 120 days
2. Creditors and courts must approve the plan
--> Under bankruptcy code, an entire class of claims is considered to have accepted the plan if
creditors, holding at least TWO-THIRDS of the dollar amount in claims and representing more
than 50 PERCENT of the total number of creditor in that class, agree to the plan.
3. Court confirms plan
Two types of M+A buyers? What are their key differences with regard to time frame, typical
currency used, operating synergies, and potential targets? correct answers Financial Buyer (PE
Fund):
- Time frame: Shorter
- Typical currency: Cash
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