Coupon Rate Set as Foundation for a Private Equity Offering
Client: Private U.S. Energy Company
Challenge: Set the Coupon Rate in an Arm’s Length Preferred Stock Sale
A private company in the U.S. energy field asked AccuVal to help it determine a coupon rate for preferred shares of stock, which it was planning to sell through a private offering to investors. At the same time, external challenges were impairing its ability to operate and remain current on its payroll obligations. It needed to raise short-term operating cash.
AccuVal Approach
To determine a reasonable coupon rate for the preferred stock offering, AccuVal conducted a detailed analysis that included factoring in the company's own operating risks while the external operating uncertainties remained unsettled. We also analyzed projections for the overall energy industry and researched rating on recent similar loans in that industry. We probed credit markets for comparable tradable preferred stock rates to establish a foundation for our recommendations.
Bottom Line: Company Accepts Coupon Rate; Continued Operations Despite External Challenges
The company was pleased with AccuVal's work and used it as the foundation to back its coupon rate distributions to new shareholders. This enabled the company to move past the short-term, external challanges and better position it to face the future.
The AccuVal AdVantage™
The ability to build a firm foundation of support for important financial decision-making. A knowledge of credit and debt markets, and the ability to apply that knowledge to new and untested transactions. Broad experience in business equity evaluations. Decades of understanding balance sheet integrity. That's The AccuVal AdVantage™ at work.
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