Professional Documents
Culture Documents
by,
C.Venkatasubramanian 2009507057
Introduction
A private placement results in the sales of securities by a company to one or few investors The distinctive features of Private Placements are there is no need for a formal prospectus as well as an underwriting assignment The terms of the issue are negotiated between the company (issuing securities) & the investors
Closely held public limited companies and private limited companies which cannot access general investing community through a public issue in the capital
Accessibility
Almost every company irrespective of whether it is a public limited company or a private limited company ,or whether it is a listed or an Non-listed company can access the private placement market Private placement market can accommodate issues of smaller size whereas the public issues market does not permit an issue below a certain minimum size
Flexibility
In a private placement ,there is greater flexibility in working out the terms of issue In addition to the greater flexibility at the time of structuring the issue initially , there may be latitude to re-negotiate the terms of issue subsequently and even roll over the debt.
Speed
Time frame required for completion :
Contd.
The company must have paid dividend for at least two years in the preceding three years In the case of a listed company the stock price should be above par for six months prior to the issue
Interest Cover => Profit before interest and depreciation/ (Existing Interesting liabilities + Interest liability on proposed debentures) Asset Cover => Fixed assets/(Secured borrowings and debentures charged to fixed assets (Revaluation of assets not to be considered)
Questions ????