Bristol
has developed a well executed program for raising equity capital for public
companies. The time frame for structuring and documenting a Straight Equity,
Convertible Preferred or Convertibe Note issue can be as short as one
week for a public company with significant dollar trading volume or may
take as long as three months for a more traditional private placement
process with institutional investors. Using a Straight Equity or a Convertible
structure, the funds are received at closing of the documentation, while
using the Equity Line structure, funds are only received after a draw
down by the company, which is after a one or two month registration process.
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Step One: Assess Capital Requirements and Determine Financing Structure
Bristol will review
the Company's financial position and assess the Company's capital requirements.
Management must be strong and have a clear vision for how they plan on
growing their business. Bristol and the Company will jointly determine
the best structure for raising capital. If, for example, a publicly traded
company has an immediate need for cash and cannot wait for incremental
installments of the investment to be made, Bristol would recommend Straight
Equity or Convertible securities sold at a fixed conversion price. Bristol
would seek to put in place the safeguards that protect current shareholders
from excessive dilution.
Step Two: Contact Investors
Bristol maintains
contact with hundreds of U.S. and foreign investors. Many investment groups
are industry or geographically focused, which is a strong tool for assessing
preliminary interest. Certain investors also favor defined terms and dollar
amount, which may or may not coincide with the Company's proposed structure.
Once contacted, Bristol will send a summary of the proposed financing
(a term sheet) to the investor for evaluation and discussion.
Step Three: Documentation and Close
As a registered broker/dealer,
Bristol will facilitate the signing of the Purchase Agreements, the closing,
and advise the Company on required public filings. Typically, Purchase
Agreements contain (1) the terms of the purchase and the sale, including
purchase price or pricing formula and amount of securities purchased,
(2) the mechanics of closing, and (3) customary representations and warranties
by the company as to its assets, business and operations. Once agreeable
terms are negotiated and accepted, Bristol will continue to play a significant
role as a liaison for all information between the investor and the Company.
Documentation
The private placement documentation will include a security purchase agreement, registration rights agreement and a warrant agreement. Bristol can recommend attorneys who are experts in delineating terms such as convertibility and registration.
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