Quote:
Originally Posted by Gengen
All,
I'm becoming confused. SEC came out with limiting oversubscription to 25% of an offer. However, I'm getting confused as per its interpretation.
Interpretation 1
If a company offers for sale 100 million units, the maximum it can allot due to oversubcription is 100 + (0.25 x 100) = 125 million units irrespective of the oversubcription level
Interpretation 2
If a company offers for sale 100 million units, and investors apply for 500 million units, the maximum it can allot is 100 + 0.25(500 - 100) = 200 million units.
My initial belief is that Interpretation 1 is the right one. Or am I wrong? Has the regulation been modified?
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SEC rule is that coy can only retain up to a max of 25% of oversubscription.
Your #2 is in line with this. So that will be:
Initial 100m units minus 500m units total application = 400m.
Then 25% of 400m units = 100m units.
Total to be issued = 200m units.
Shike'na