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Unregistered debt or equity securities negotiated between an issuer and a limited number of investors, private placements often provide capital for a company’s strategic plans and commonly take the form of long-term, fixed-rate debt.
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| Structural Characteristics |
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No exchange listing, active trading, SEC registration or public disclosure |
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Pricing similar to public security at a spread over current U.S. Treasuries |
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Senior debt, subordinated debt, structured finance and foreign currency options (secured or unsecured) |
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Flexible payment structure |
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Amortizing or bullet |
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Fixed or floating rate |
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Medium- to long-term maturity, from three to 25+ years |
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Complement to bank facility |
| Typical Size |
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$10 million - $300 million |
| Typical Uses |
| Many companies, both public and private, issue in the private placement market for: |
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Debt refinancing |
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Expansion/growth capital |
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Acquisitions |
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Stock buyback/recapitalization |
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Going-private transactions |
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Issuer Benefits
Advantages relative to bank financing: |
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Diversity of capital providers |
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Tenor of financing commitments |
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Longer maturities |
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Fixed interest rate |
| Advantages relative to issuing in public markets: |
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Attractive economics, particularly for private placements less than $500 million |
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Size and depth of market |
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Tailored transactions |
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Limited disclosure |
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No requirement for rating agencies |
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All-in costs |
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Quick and efficient execution |
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