July 26, 2005

The Risks of Loans Being Considered Securities

One of the more academic of the tasks encountered working in Corp Fin’s Office of Chief Counsel is delving into the quagmire of what are the limits of the definition of a “security,” an issue that is raised in a fair number of no-action requests. This issue rears its ugly head all too commonly these days in the loan context.

In this podcast, Greg Woods of Debevoise Plimpton explains the circumstances under which loans can be considered securities, including

– In what way are syndicated loans related to the securities laws?
– Why is this issue relevant today?
– What would the implications be if syndicated loans were treated as securities?
– What are the factors that the courts examine to determine if a loan is a security?
– What should industry participants do to address this issue?

ISS’ 2005 Preliminary Post-Season Report

Yesterday, ISS released a preliminary report that indicates that companies and investors are further embracing the concept of constructive dialogue which played out in a less confrontational 2005 proxy season.

ISS states that “However, all was not calm on the annual meeting front as hedge fund managers emerged as major players on the governance scene this season by shaking up numerous boardrooms via hostile offers, proxy contests for board seats and “vote no” campaigns. And, despite increasing scrutiny to provide more transparent and meaningful disclosure on executive compensation, this is still not standard practice across all companies. In fact, ISS suggested “withhold” votes from compensation committee members at 56 companies with pay practices out of alignment with performance.”

Negotiating Tactics

Today, the next installment of “M&A Boot Camp” is available. This segment is brought to life by Wilson Chu of The Deal Guys’ Blog fame, doing his bit on negotiating tactics, such as:

– Gentleman Dealmaking
– Win-Win Does Not Mean: I Win Twice
– Negotiating Reps and Warranties
– Schedules Really Matter
– LOIs as Upfront Ego Management
– Take a Seventh Inning Stretch
– Use of Undermining Words and Phrases
– The Longer You Sit on a Problem, the More You’ll Own it
– Limitations of Emails and Conference Calls
– Educating Your Client to Support Your Position
– Go Deep – Be Prepared for Multiple Levels of Arguments
– Driving the Deal
– Always, Always be Prepared

If you are not a member, try a no-risk trial as we just launched our half-price “Rest of 2005” rate – believe it or not, a license for a single user is only $100 and there are similar reduced rates for offices with more than one user!

Face Change for the PCAOB

The PCAOB has changed the “look and feel” of its home page. I fully understand that the PCAOB considers Sarbanes-Oxley important since that legislation is the action from whence the PCAOB sprang, but it’s a little odd that the PCAOB now prominently displays a link to the entire Act smack dab in the middle of the home page. Like pouring salt in a wound…