STAGES OF A BOND ISSUE (Part - 4)

STAGE 2: LAUNCH

 

This stage of a bond issue involves the issuer announcing its intention to issue its bonds. Unless the issuer intends to sell the bonds to a specific investor, it will need to find investors to buy the bonds when they are issued. This is a key stage for the parties' lawyers because this is when drafts of the documents are sent to the parties, the terms and conditions are negotiated, and revised documents are produced.

Launch date - The day of launch is the day the lead manager publicly announces the issue, which then appears on the electronic screen pages that are used to trade securities in the capital markets.

 

Invitation telex - On or just after launch, the lead manager sends an invitation telex containing the proposed terms of the bond issue to the prospective managers, who review it and decide whether to join the syndicate and act as managers. Sometimes, if the managers and lead manager have previously underwritten similar issues together, the lead manager may just send a term sheet instead of an invitation telex. The invitation telex usually includes the following:

Terms - Proposed terms of the bond issue.

Selling restrictions - Any relevant selling restrictions that apply to the issue.

Fees - The fees of the managers.

Agreement among managers - Which version of the two industry-standard agreements among managers is to be used.

 

The prospective managers then decide whether they want to join the syndicate of banks and underwrite the issue. If they join the syndicate, the sales desks at the manager banks start seeking investors by telephoning their contacts or conducting roadshows (meetings with investors) and selling the bonds to them (this is called pre-selling the bonds).

 

Informing clearing systems and listing authority - If, as is usual, the bonds are to be cleared and settled through a clearing system, the lead manager contacts the relevant clearing system with the details of the bond issue and the arrangements for closing. If the bonds are to be listed abroad, the rules of the relevant listing authority need to be followed and, if necessary, a local listing agent may need to be appointed to liaise with the listing authority and stock exchange.

 

Negotiating the terms of the issue - The lead manager's lawyers send the documents to the relevant parties. Terms of the issue are negotiated between the parties, and further drafts are produced of the documents until all documents have been agreed.

 

Contact us for all your financing/bond requirements.

 

Financial Products

Total Capital Solutions Ltd has strong relations with various Financial Institutions and can help companies acquire letters of credit, bank guarantees, proof of funds and performance bonds.

Credit Facility

A Credit Facility is a flexible financing structure in which GPG commits to purchasing shares of common stock directly from a company, at prevailing market prices, over a multi-year period - contact us for more information.

Prospectus Preparation

Our legal associate can prepare Prospectus both in English and German and handle the BaFin or FSA approval process.