welcome to our webinar

Transcription

WELCOME TO OUR WEBINAR
Tuesday, March 23, 2010
4:00 p.m. Israel Time / 2:00 p.m. GMT / 10:00 a.m. ET
Presented by:
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US participants: 800 768 3350
Outside the US: 212 231 2909 or +44 647 722 6865
The audio portion is available via conference call. It is not broadcast through your computer.
*This webinar is offered for informational purposes only, and the content should NOT be construed as legal advice on any matter.
Introduction
CURRENTLY SPEAKING
Introduction of Panelists
Dean Colucci
Partner
DLA Piper
Jeff Lumby
Joshua Feldman
Sr. Managing Director Director
Cantor Fitzgerald
Cantor Fitzgerald
Daniel Goldberg
James Seery
Nir Weissberger
Guy Hadar
Partner
DLA Piper
Partner
DLA Piper
Partner
Eitan-Mehulal
Attorney
Eitan-Mehulal
Overview of At-the-Market Offerings
Mechanics of ATM Execution
US Law and the Legal Mechanics of Structuring a Deal
Israeli Law Issues Related to ATM Issuance in US
Questions and Answers
At-the-Market Offering – A Guide for US-Listed Israeli Companies
March 9, 2010
2
What Is An ATM Offering?
ATMs enable public companies listed on a U.S. Exchange (NYSE, AMEX,
NASDAQ) to sell to the public periodically during the term of the offering,
through a broker-dealer, registered common or preferred shares in amounts
and at times of the issuer’s choosing
The shares are sold at the then prevailing “market price” to “natural interest”
in the market – thus the name “At-the-Market” offering
Employed by public companies eligible to issue securities using either Form
S-3 under Rule 415 of the Securities Act of 1933 (“Securities Act”) or Form F3 (as employed by Foreign Private Issuers)
March 23, 2010
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At-the-Market Offerings (ATMs)
ATM programs with a value in excess of $40 billion have been implemented
since 2001 with programs put in place in 2009 exceeding $22 billion in value
(value calculated at time of filing)
Issuers from a wide variety of industries including:
Airlines
Banking and financial services
Biotech and life sciences
Energy and utilities
Natural resources
Real estate and real estate investment trusts
Technology
March 23, 2010
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Overview of the Controlled Equity OfferingSM

Cantor’s ATM product, the Controlled Equity OfferingSM (CEOSM) Program, is a
flexible equity offering vehicle that gives its clients the ability to sell shares from
time-to-time by discreetly feeding demand in market neutral transactions

Cost efficient, low-profile financing option for companies to raise capital over
time

Enables issuers to raise equity when needed and to match the sources and
uses of funds

Minimizes underwriting costs – transaction costs range from 2 to 5% depending
on market cap of issuer and size of transaction, but if Cantor exceeds the
volume weighted average price of the security being issued (VWAP) over the
execution period authorized by client, the all-in-cost of issuance is significantly
reduced and dilution minimized

Leverages Cantor’s position and trading expertise as the dominant third market
trading firm
March 23, 2010
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Cantor Fitzgerald and ATMs

Cantor Fitzgerald created one of the first ATM programs available to public companies
and Cantor remains the leader in ATM offerings

Cantor has executed far more ATM offerings than any other broker-dealer since 2001
(including 20 programs in 2009)

Senior-level “dedicated” execution team has been active in ATM transactions since
2001 – skilled in accessing all liquidity pools and executing both anonymously and
efficiently
90
80
70
60
50
40
30
20
10
0
83
$10,053
$10,000
Number of Transactions
$6,000
30
28
20
Cantor
Fitzgerald
BofA /
Merrill
Lynch
UBS
BoNY /
Mellon
19
Brinson
Patrick
Value of Transactions
$8,000
$5,235
$5,005
$3,675
$4,000
17
Morgan
Stanley
14
11
JP
Goldman
Morgan Sachs
11
Citi
Source: Dealogic as of December 31, 2009 and CF&Co. Internal
Data
$3,256
$3,063
$2,136
$1,351
$2,000
$1,335
$0
Cantor Morgan
Fitzgerald Stanley
BofA /
Merrill
Lynch*
UBS
Goldman BoNY /
JP
Credit
Sachs Mellon Morgan Suisse
*Does not include ATM done to raise its own capital
Note: Value of transactions determined by value at filing / ATM
Value Limit
March 23, 2010
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Citi
Benefits of ATM Offerings
Event Driven
Continuous Capital
Need
Balance Sheet
Strength
Increased Liquidity
Cost of Capital
Flexibility & Control
Anonymity
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Benefits of ATMs and the Cantor CEOSM

Flexibility & Control: Ability to execute on natural demand when there is a need, number of shares
and minimum price. Can change instruction as often as desired.

Sales are only made per the company’s specific instructions

Client parameters include size, price, and type of execution

Sales can be initiated, halted, or changed at any time

Efficiency: Able to match uses and sources better than traditional offerings

Superior Distribution: Traded over 108 billion shares globally last year. Highest crossing ratio.
Ability to trade anonymously away from the primary exchange.

Lower Cost of Capital: No market discount, no warrant coverage, lower underwriter compensation

Ability to Monitor Progress: Sales price versus VWAP over time period in which Cantor is
authorized to execute

Anonymity: Sales are made completely anonymously and execution anonymity ensures that the
market will not be aware when or if sales are made through the ATM structure
March 23, 2010
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Cantor Advantage

At Cantor Fitzgerald, orders are executed by dedicated ATM capital
markets traders who are entirely focused on issuers

Information flows only one way from Cantor’s 15 trading floors to the
ATM capital markets traders. Even internally at Cantor, the ATM capital
markets trader’s execution remains anonymous.

While a majority of all sales are made anonymously at-the-market, the
ATM structure provides the flexibility to execute negotiated block
transactions
March 23, 2010
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Lower “All-in-Cost”
ATMs and Cantor’s CEOSM product allows companies to raise money without sacrificing
price-stability, and at less of a cost than follow-on offerings, registered directs or PIPEs
For PIPEs/registered directs announced YTD, the all‐in cost of capital is near 20% when taking into account the underwriter fee, market discount and warrant coverage
20%+
15%
15%+
Non‐CEO deals traditionally observe a negative impact on their stock price going into the transaction as well as post‐announcement Cantor’s underwriting fee is typically 2‐5%, and historically Cantor has beat the VWAP when placing shares. CEO deals traditionally do not experience any significant price impact. Source: Capital IQ
Note: Financings include deals with transactions over $10m and under $150m. Market discount based on the closing price one day prior to announcement.
March 23, 2010
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Who Is Eligible for ATMs?
Companies listed on a US Exchange (NASDAQ, AMEX, NYSE) that are
eligible to file either Form F-3 or Form S-3 Shelf Registration Statements
under Rule 415 of the Securities Act
This includes Israeli companies whether or not dually listed on the Tel-Aviv
Stock Exchange
Form F-3/S-3 eligibility requirements for issuers with a public float of greater
than $75 million:
Securities registered under Section 12 of Securities Exchange Act of 1934
(“Exchange Act”) are required to file reports under Section 15(d) of Exchange Act
Timely file all Exchange Act reports during the 12 months preceding the later of the
filing of the F-3/S-3 or the 10-K/20-F
March 23, 2010
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Who Is Eligible for ATMs?
Form F-3/S-3 eligibility requirements for issuers with a public float of less than
$75 million:
The requirement for issuers with a public float of greater than $75 million and
The issuer must have a class of common equity securities listed and registered on a
US national securities exchange
The issuer must not have been a shell company for a minimum of 12 months prior to
the filing of the F-3/S-3
Issuers with a public float of less than $75 million may not sell more than 1/3
of its public float under an F-3/S-3 over a period of 12 months including the
ATM and any other shelf takedowns
March 23, 2010
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US Legal Documentation for ATMs
Effective form F-3/S-3
Prospectus supplement – filed pursuant to Rule 424(b)(2) or 424(b)(5) of the
Securities Act
Sales agreement or equity distribution agreement – similar in form and
substance to typical underwriting agreement
Filed with SEC on Form 6-K or Form 8-K at execution
Stays in place for as long as there is unsold stock
The issuer has ongoing obligations throughout the term of the agreement
including:
Quarterly negative assurance letters from the issuer’s counsel
Quarterly comfort letters from the issuer’s auditors
March 23, 2010
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Israeli Legal and Regulatory Considerations
Israeli Securities Law – 1968; Securities regulations
Israeli securities laws and regulations will apply to ATM offerings of Israeli
companies
ATM offerings can be structured to be exempt from the prospectus requirements
under Israeli law including the need for a permit from the Israeli Securities Authority
Similarly, ATM offerings of non-dually listed companies can be structured to
minimize applicability of on-going reporting requirements under Israeli Securities
laws and regulations while dually listed companies will remain subject to certain
reporting requirements under Israeli Securities laws and regulations
March 23, 2010
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Israeli Companies Law–1999; Companies regulations
Corporate issues will also be governed by Israeli corporate laws and
regulations
Including procedures for approval of the ATM, issuance of the offered
securities and related matters
Tel-Aviv Stock Exchange Rules and Regulations
Will apply to dually listed companies (traded on a US Exchange as well as on
the Tel-Aviv Stock Exchange)
March 23, 2010
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OCS / Investment Center
Approvals of / notices to the Office of the Chief Scientist of the Israeli Ministry of
Industry and Trade, Israeli Investment Center may be applicable
Other specific requirements may be applicable
March 23, 2010
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Israeli Documentation Considerations
Israeli issues in offering documents
Updated Israeli matters addressed in F-3 / 20-F / Prospectus Supplement
Including ‘Risk Factors – Risks Related to Operations in Israel’, ‘Information on the
Company’, ‘Directors, Senior Management and Employees’, ‘Major Shareholders
and Related Party Transactions’, ‘Description of securities’, ‘Taxation – Israeli
Taxation’
March 23, 2010
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Compugen Case Study
Price/Volume Chart
Historical Trading Analysis
30,000,000
At Filing
At Conclusion of ATM Program
Oct. 30, 2009
Dec. 29, 2009
Stock Price
2.56
4.62
52‐Week High
3.37
5.86
52‐Week Low
0.34
0.34
29.1m
33.2m
73
132
85,000
1,635,000
2.87
3.01
0.24
4.93
5.00
ANNOUNCES COMPLETION OF CEO PROGRAM
25,000,000
DISCOVERS DRUG TARGET FOR TREATMENT OF EPITHELIAL TUMORS
4.00
20,000,000
“DISCOVERY ON DEMAND” THERAPEUTIC PEPTIDE COLLABORATION WITH PFIZER
3.00
15 , 0 0 0 , 0 0 0
Shares Outstanding (mm)
2.00
10 , 0 0 0 , 0 0 0
Market Capitalization ($mm)
Daily Share Volume 1. 0 0
5,000,000
Volume
Average Price Price
1
1
1
0.00
Mar‐09Mar‐09 Apr‐09 Jun‐09 Jun‐09 Jul‐09 Aug‐09 Sep‐09 Oct‐09 Nov‐09 Dec‐09 Jan‐10
0
$Volume/Day (mm)
1 Trailing 60‐days
Source: CapitalIQ
March 23, 2010
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Compugen Case Study – Lessons Learned
Compugen filed a CEO at a time when they needed to raise a small amount of
capital to continue to have 12+ months or more of cash
Their stock price was not at an attractive price, their volume was down and most
traditional deals would have required warrants and a significant discount
As of a result of Compugen’s low volume there was pent up demand for their
shares. When Compugen began utilizing the CEO program, we witnessed a
meaningful increase in aggregate volume.
As a result of a number of key catalysts including a deal with Pfizer, Compugen’s
share price and volume skyrocketed and they were able to take advantage of this
through the CEO
Compugen was selected as one of the Top 5 best performing biotech stocks in
2009 by TheStreet.com
BOTTOM LINE: Compugen raised money at very attractive prices with zero
warrant coverage, minimal management time, and they significantly
increased the liquidity in their stock
March 23, 2010
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Distinctions Between ATM and
Other Equity Offerings
Equity lines of credit, registered directs, and PIPEs are more dilutive, typically
require warrant coverage, and incur much higher all-in transaction costs than
ATMs
There is generally no lock-up period under US law during the term of the
agreement and the issuer is free to pursue a traditional follow-on if business
or market conditions merit
Equity issuances are disclosed at the end of each quarter in the issuer’s
periodic reports under the Exchange Act
For NASDAQ Issuers, ATM programs (unlike PIPES, equity lines and certain
registered direct offerings) are considered “Public Offerings” under NASDAQ
Rule 5635 – shareholder approval is NOT required under US laws if the
issuer desires to issue more than 20% of its common stock or voting
securities through an ATM offering
March 23, 2010
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What the Research Analysts Are Saying...
The [Cantor] continuous offering allows companies to raise very low cost capital, while also having control over the
timing and size of the offering, as well as selectively expand their institutional ownership. We believe this is a very
intelligent source of capital with minimum disruption.
Wachovia
From an issuer’s perspective, this program [CEOSM] has several advantages in our view. First, management of the
issuer does not need to conduct time consuming road shows. Second, the issuer does not face the risk of seeing its
stock price drop in the market between the time of announcement and pricing. Thus, the cost of issuing equity in this
manner is meaningfully more affordable than the traditional bulk sale method.
Bank of America
The company entered into agreement with Cantor Fitzgerald to sell up to two million shares of beneficial interest...We
believe that this is an efficient way to raise capital and fits the company's matching funds strategy. We do not expect the
company to utilize this capital until later in the year.
Stifel, Nicolaus & Company
We remind investors that the controlled equity offering (CEO) program allows companies to issue equity in small,
periodic increments. CEOs are usually done to manage capital needs and raise capital in an optimal fashion, with
periodic increments that may not cause as much pressure on a stock as a single large equity offering might. Further,
CEOs have lower underwriting fees. The prospectus indicates that [The Company] will be paying a 2% gross fee materially lower than the 4.5% underwriter's fee paid by [other companies] in recent secondary offerings.
Macquarie
March 23, 2010
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Select ATM Transactions
$105,000,000
$72,000,000
$15,000,000
$175,000,000
$125,000,000
$175,000,000
$20,000,000
$75,000,000
$142,500,000
$155,000,000
Continuous Offering
February 2010
Continuous Offering
February 2010
Continuous Offering
January 2010
Nationwide
Health Props.
Continuous Offering
January 2010
Continuous Offering
November 2009
Continuous Offering
November 2009
Continuous Offering
October 2009
Continuous Offering
October 2009
Continuous Offering
October 2009
Nationwide
Health Props.
Continuous Offering
August 2009
$35,000,000
$30,000,000
$75,000,000
$45,000,000
$30,000,000
$54,600,000
$31,800,000
$475,000,000
$37,400,000
$23,500,000
Continuous Offering
July 2009
Tortoise Energy
Continuous Offering
July 2009
Continuous Offering
July 2009
Continuous Offering
June 2009
Continuous Offering
June 2009
Continuous Offering
June 2009
Continuous Offering
May 2009
Continuous Offering
May 2009
Continuous Offering
April 2009
Continuous Offering
April 2009
$21,000,000
$24,000,000
$130,000,000
$60,000,000
$20,000,000
$226,000,000
$24,000,000
$500,000,000
$80,000,000
$13,000,000
Dynex Capital
Continuous Offering
March 2009
Ramco
Gershenson
Continuous Offering
January 2009
Nationwide
Health Props.
Continuous Offering
January 2009
Continuous Offering
January 2009
Continuous Offering
December 2008
Continuous Offering
December 2008
Continuous Offering
November 2008
DryShips
Continuous Offering
November 2008
Continuous Offering
July 2008
Continuous Offering
July 2008
$100,000,000
$170,000,000
$425,000,000
$114,000,000
$20,000,000
$155,000,000
$720,000,000
$150,000,000
$21,000,000
$42,000,000
Ocean Freight
Continuous Offering
June 2008
Anworth
Continuous Offering
May 2008
DryShips
Continuous Offering
March 2008
Continuous Offering
January 2008
Continuous Offering
January 2008
Nationwide
Health Props.
Continuous Offering
December 2007
DryShips
Continuous Offering
October 2007
Anworth
Continuous Offering
July 2007
Continuous Offering
May 2007
Education Realty
Continuous Offering
May 2007
$160,000,000
$24,000,000
$260,000,000
$975,000,000
$250,000,000
$25,000,000
$125,000,000
$25,000,000
$80,000,000
$140,000,000
Continuous Offering
December 2006
Continuous Offering
November 2006
Continuous Offering
October 2006
Cedar Shopping
Centers
Continuous Offering
September 2006
Nationwide
Health Props.
Continuous Offering
September 2006
FAMCO/Claymore
Opportunity Fund
Nationwide
Health Props.
Continuous Offering
May 2007
Continuous Offering
April 2007
Continuous Offering
March 2007
Continuous Offering
March 2007
HRPT Props.
Continuous Offering
December 2006
$95,000,000
$30,000,000
$200,000,000
$50,000,000
$305,000,000
$26,500,000
$110,000,000
$425,000,000
$25,000,000
$230,000,000
Continuous Offering
April 2006
Valence
Continuous Offering
April 2006
Nationwide
Health Props.
Continuous Offering
January 2006
Continuous Offering
July 2005
Continuous Offering
May 2005
Continuous Offering
November 2004
Continuous Offering
July 2006
Continuous Offering
June 2006
Continuous Offering
May 2006
DryShips
Continuous Offering
May 2006
$146,000,000
$70,000,000
$260,000,000
$50,000,000
$210,000,000
$60,000,000
$80,000,000
$75,000,000
$50,000,000
$80,000,000
Continuous Offering
August 2004
Continuous Offering
August 2004
Continuous Offering
July 2004
Anworth
Continuous Offering
May 2004
Continuous Offering
April 2004
Anworth
Continuous Offering
November 2003
Continuous Offering
July 2003
Continuous Offering
April 2003
Continuous Offering
January 2003
Continuous Offering
August 2002
March 23, 2010
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Contact Us
Dean Colucci
Partner, DLA Piper
+1 212 335 4794
[email protected]
Jeff Lumby
Joshua Feldman
Nir Weissberger
Sr.Managing Director, Cantor Fitzgerald
+1 212 829 4717
[email protected]
Director, Cantor Fitzgerald
+1 212 829 4846
[email protected]
Partner, Eitan-Mehulal
+972 9 9726090
[email protected]
Guy Hadar
James Seery
Attorney, Eitan-Mehulal
+972 9 9726059
[email protected]
Partner, DLA Piper
+1 212 335 4830
[email protected]
Daniel Goldberg
Partner, DLA Piper
+1 212 335 4966
[email protected]
March 23, 2010
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About Cantor Fitzgerald
COMMERCIAL REAL ESTATE

BULGE BRACKET
CAPABILITIES
Commercial Real Estate Lending, Investment, Advisory, Asset Management and Investment Banking

Experienced team of senior managers with 80 years of combined experience

The team has facilitated over $160 billion debt transactions and over $40 billion public and private REIT transactions
DEBT CAPITAL MARKETS & FOREX

Credit Securities (IG, HY Corp., Hybrids)

Mortgage Securities (CMOs, ABS, CMBS)

Repos/Securities Lending

Interest Rate Products
Agencies (FNMA, FHLB, FFCB, TVA, SLMA, SBAs)

In 2008, traded over 108bn shares with approximately $1 trillion in value
Top ranked execution in both illiquid and difficult trades
Major global player

Daily coverage of over 5,000 institutional clients around the globe

Focus on smaller cap stocks
INVESTMENT
BANKING
EQUITY CAPITAL MARKETS

Equity & Debt Origination
Financial Advisory (including M&A and restructurings)
Merchant Banking
IPO, Follow‐On & Controlled Equity Offerings
One of the largest sales forces in the industry: over 280 global institutional sales and trading professionals
Market Leader in Controlled Equity Offerings
Known for cross‐trading and block trading abilities
FIRM OVERVIEW
Founded in 1945 Cantor Fitzgerald, L.P. is a global financial services firm with a leading position in the fixed income and institutional equity markets One of only 18 primary dealers permitted to trade U.S. Government securities directly with the Federal Reserve Bank
Headquartered in: New York City; worldwide presence, including Europe, India & China/APAC
Private Partnership; over 3,700 employees worldwide—rapid and profitable recovery after 9/11
Industry‐recognized execution capabilities ‐ Traded 100 billion equity shares in 2008 – over $1.1 trillion in value
Trade over 7,700 Listed NYSE, NASDAQ & AMEX securities as well as OTCBB and Pink Sheet securities Market Maker in over 4,600 securities , ensuring 3rd market liquidity, a vital part to the success of thinly traded middle market companies
March 23, 2010
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About DLA Piper
THE FIRM
More than 3,500 lawyers in
67offices and 29 countries
The US practice includes
approximately 1,300 lawyers
In Europe and Asia, the firm
has approximately 2,200
lawyers
The largest law firm in the
world by number of lawyers
and the only firm in the world
with more than 1,000 lawyers
on each side of the Atlantic
OUR CLIENTS
We represent half of the
FTSE 250 or their subsidiaries
and more than 140 of the top
250 companies in the Fortune
500
March 23, 2010
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About Eitan - Mehulal
Combining a distinctive interdisciplinary approach
the Eitan-Mehulal Law Group’s expertise spans
across multiple industries and jurisdictions,
supporting the global legal interests and worldwide
needs of our Israeli clients as well as those of
our foreign clients in Israel.
Corporate Securities Financing Technology law
Taxation Litigation Bankruptcy Labor law
Real Estate Intellectual Property
Representative Clients
Microsoft, Merck, Nike, Seiko, Iscar, Blades Technologies, Shamir Optical, Keter Plastic, CaesarStone,
Oil Refineries, Klil Industries, Saifun, Marvel, HP, Agilent, Apple, Google, Bank Hapoalim, Union Bank,
Nikon, Albemarle, Vertex, Walden, Giza, Medica, Formula, Castro, Bird & Bird
March 23, 2010
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