At-The-Market Offerings – Current Trends and Developments

by Reed Smith
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Introduction

At-The-Market offerings ("ATMs") are one of the most efficient ways for public companies to raise capital. Any publicly traded company that meets the requirements to use an effective shelf registration statement may sell its shares over the existing trading market from time to time by engaging an investment bank as a selling or distribution agent. ATMs have been used more frequently than in the past. For example, U.S. companies raised approximately $2 billion through 60 ATM offerings across 20 industries in the first quarter of 2011 alone. Compared to the first quarter of 2010, this dollar amount represents almost a 29 percent increase in the use of ATMs for the same quarter in 2011. Due to the increase in the use of ATMs, we have provided some of the current trends and developments in this product.

ATMs: In General

An ATM offering is a registered offering by a publicly traded issuer of its listed securities directly into the market at other than fixed prices. The issuer may, at its discretion, sell newly issued stock into the trading market from time to time through a designated sales or distribution agent at market prices. This differs from traditional underwritten offerings where a fixed number of shares are sold at a fixed price all at once.

ATMs are available for use by issuers that are eligible to conduct shelf offerings using Form S-3 under Rule 415 of the Securities Act of 1933, as amended (the "Securities Act"), (or Form F-3 for foreign private issuers)1 on a primary basis2. For an ATM offering, an issuer must have a Form S-3 or Form F-3 registration statement on file and effective with the Securities and Exchange Commission (the "SEC"). The issuer can either (1) use a portion of an existing shelf registration statement specifically allotted for ATM offerings, or (2) file a new shelf registration statement. If using an existing shelf registration statement, a prospectus supplement will be filed including, among other things, a description of the securities to be issued, the size of the program, the general terms, and the commissions or fees that the issuer will pay.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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