A lot has been said about the SEC’s recently proposed reforms to the registered offering framework. We partnered with Simpson Thacher to ask a more focused question: How could the proposed reforms affect the convertible market?
The proposal would significantly expand Form S-3 eligibility and make registered offering structures available to a broader range of issuers, including recently public companies and former SPACs. While we do not expect the reforms to displace the traditional Rule 144A convertible market, they could create meaningful new flexibility for certain equity-linked transactions.
Among the key implications:
• Expanded access to registered offerings for issuers that historically have not qualified for Form S-3.
• Greater flexibility for convertible and equity-linked transactions, including registered convertible offerings and exchange transactions.
• Broader use of supporting structures such as registered borrow facilities and delta placements, which can facilitate investor hedging and improve execution options.
• New opportunities for recent IPOs and de-SPAC companies to access registered market structures sooner and potentially gain greater visibility into security holders.
In our memorandum, we explore how the proposed reforms could affect issuers, investors and the future use of registered structures in the convertible market.
