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In a recent decision in In re Investor Bancorp, Inc. Stockholder Litigation, the Delaware Court of Chancery held that a fully informed stockholder vote approving adoption of an equity incentive plan also ratified subsequent equity awards to individual directors under the plan.
What about the Thompson family, which did an LBO of the company, taking out $200 million from the buyout and subsequent equity sales?
With the hits to book value and subsequent equity dilution perceived to be mostly history, this remains a dangerous but ultimately viable hypothesis.
(His own stake has been watered down to 2% by subsequent equity offerings). The over-the-counter stock took a year to recover to its precrisis level in August before surging another 30% to $5.90 in mid-May, which Eve Jung of Citigroup Global Markets Asia expects to trend higher on the EV battery's progress.
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In light of the subsequent equities slump, those New Economy analysts learned what White and his team had been preaching all along: Valuations do matter.
Rather than using the proceeds from an initial public offering and subsequent seasoned equity offerings to invest in real assets, these companies acquire portfolios of equity securities.
And the more likely it is that subsequent private equity fundraising will also fail.
In the subsequent structures, the equity was handled in much the same way.
"He went his own way with the capital increases and raising money by bonds, and a lot of the major shareholders are not happy" with the subsequent dilution in their equity, he said.
In response, the government created four Asset Management Companies (Cinda, Orient, Great Wall, and Huarong) to take over those bad loans.Since then, everyone has applauded the government's creation of the asset management companies and the subsequent injection of new equity capital into the banks.
"If this had been a VC deal, my stake in the company would be down to less than 10% by now, for every subsequent round of raising equity means dilution," he says.
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com