RULE 144A OFFERING:

What is Rule 144A?

 

Rule 144A is a safe harbor exemption from the registration requirements of Section 5 of the Securities Act of 1933, as amended (the “Securities Act”) for certain offers and sales of qualifying securities by certain persons other than the issuer of the securities.

 

The exemption applies to resales of securities to qualified institutional buyers, who are commonly referred to as “QIBs” (Qualified Institutional Buyers). QIBs must be institutions, and cannot be individuals—no matter how wealthy or sophisticated.

 

The securities eligible for resale under Rule 144A are securities of U.S. and foreign issuers that are not listed on a U.S. securities exchange or quoted on a U.S. automated inter-dealer quotation system. 

 

Rule 144A provides that reoffers and resales in compliance with the rule are not “distributions” and that the reseller is therefore not an “underwriter” within the meaning of Section 2(a)(11) of the Securities Act.

 

A reseller that is not the issuer, an underwriter, or a dealer can rely on the exemption provided by Section 4(a)(1) of the Securities Act. Resellers that are dealers can rely on the exemption provided by Section 4(a)(3) of the Securities Act. 

 

What types of transactions are conducted under Rule 144A?

 

The following types of transactions often are conducted under Rule 144A:

 

  • Offerings of debt or preferred securities by public companies; 

  • Offerings by foreign issuers that do not want to become subject to U.S. reporting requirements; and 

  • Offerings of common securities by non-reporting issuers (i.e., “backdoor IPOs”). 

 

An issuer that intends to engage in multiple offerings may establish a “Rule 144A program.”  Rule 144A programs are programs established for offering securities (usually debt securities) on an ongoing or continuous basis to potential offerees. They are similar to “medium-term note programs,” but they are unregistered, and the securities are sold only to QIBs. These programs often are used by financial institution and insurance company issuers to offer securities, through one or more broker-dealers, to institutional investors in continuous offerings. Among the advantages of using Rule 144A programs are (1) no required public disclosure of innovative structures or sensitive information; (2) limited FInRA filing requirements; and (3) reduced potential for liability under the Securities Act.

What are the conditions that a reseller of restricted securities must satisfy to rely on Rule 144A?

 

There are four conditions to reliance on Rule 144A:

 

  • The resale is made only to QIBs (see “What is a ‘QIB’?” below) or to a purchaser that the reseller (and any person acting on its behalf) reasonably believes is a QIB;

 

  • The reseller (or any person acting on its behalf) must take reasonable steps to ensure that the buyer is aware that the reseller may rely on Rule 144A in connection with the resale;

 

  • The securities reoffered or resold (a) when issued were not of the same class as securities listed on a U.S. national securities exchange (which includes the NYSEMKT & NASDAQ Market Systems) or quoted on a U.S. automated Inter-Dealer Quotation System; and (b) are not securities of an open-end investment company, unit investment trust, or face-amount certificate company that is, or is required to be, registered under the Investment Company Act of 1940; and

  • In the case of securities of an issuer that is neither a Securities exchange Act of 1934, as amended (the “exchange Act”) reporting company, or a foreign issuer exempt from reporting pursuant to Rule 12g32(b) of the exchange Act, or a foreign government, the holder and a prospective buyer designated by the holder must have the right to obtain from the issuer and must receive, upon request, certain “reasonably current” information about the issuer. 

To Retain and Engage Steve Muehler - Securities for a 144A Offering:

Since 2017, we have prepared a large number of 144a Offerings, and have done so for nearly all types of company structures, and all types of securities and in every industry type. 

 

Service(s) to be Provided:

  • Drafting & Preparation of a State & Federal Securities Laws Compliant Regulation 144A Offering.

    • Our Custom 144a Offering Preparation includes (but is not limited to):

      • Offering Structuring and Development of a Presentation Grade 144A Offering,

      • all SEC Filing(s) as required via the EDGAR (for Offer & Sales),

      • Federal & State Securities Laws Compliance Review, and

      • Access to our Broker-Dealer Network & International Institutional Investment Banking Network.

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STEVE MUEHLER - SECURITIES
1055 West 7th Street
Los Angeles, California 90017
Phone: (877) 259-8066
Email: Steve@SteveMuehler.com

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