What Causes the Divestment of Multinational Companies in China?
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Divestment May Burst the Carbon Bubble If Investors' Beliefs Tip To
Divestment may burst the carbon bubble if investors’ beliefs tip to anticipating strong future climate policy Birte Ewers,1;2;∗ Jonathan F. Donges,1;3;∗;# Jobst Heitzig1, Sonja Peterson4 1Potsdam Institute for Climate Impact Research, Member of the Leibniz Association, P.O. Box 60 12 03, 14412 Potsdam, Germany 2Department of Economics, University of Kiel, Olshausenstraße 40, 24098 Kiel, Germany 3Stockholm Resilience Centre, Stockholm University, Kraftriket¨ 2B, 114 19 Stockholm, Sweden 4Kiel Institute for the World Economy, Kiellinie 66, 24105 Kiel, Germany ∗The first two authors share the lead authorship. #To whom correspondence should be addressed; E-mail: [email protected] February 21, 2019 To achieve the ambitious aims of the Paris climate agreement, the majority of fossil-fuel reserves needs to remain underground. As current national govern- ment commitments to mitigate greenhouse gas emissions are insufficient by far, actors such as institutional and private investors and the social movement on divestment from fossil fuels could play an important role in putting pressure on national governments on the road to decarbonization. Using a stochastic arXiv:1902.07481v1 [q-fin.GN] 20 Feb 2019 agent-based model of co-evolving financial market and investors’ beliefs about future climate policy on an adaptive social network, here we find that the dy- namics of divestment from fossil fuels shows potential for social tipping away from a fossil-fuel based economy. Our results further suggest that socially responsible investors have leverage: a small share of 10–20 % of such moral investors is sufficient to initiate the burst of the carbon bubble, consistent with 1 the Pareto Principle. -
Initial Public Offerings
November 2017 Initial Public Offerings An Issuer’s Guide (US Edition) Contents INTRODUCTION 1 What Are the Potential Benefits of Conducting an IPO? 1 What Are the Potential Costs and Other Potential Downsides of Conducting an IPO? 1 Is Your Company Ready for an IPO? 2 GETTING READY 3 Are Changes Needed in the Company’s Capital Structure or Relationships with Its Key Stockholders or Other Related Parties? 3 What Is the Right Corporate Governance Structure for the Company Post-IPO? 5 Are the Company’s Existing Financial Statements Suitable? 6 Are the Company’s Pre-IPO Equity Awards Problematic? 6 How Should Investor Relations Be Handled? 7 Which Securities Exchange to List On? 8 OFFER STRUCTURE 9 Offer Size 9 Primary vs. Secondary Shares 9 Allocation—Institutional vs. Retail 9 KEY DOCUMENTS 11 Registration Statement 11 Form 8-A – Exchange Act Registration Statement 19 Underwriting Agreement 20 Lock-Up Agreements 21 Legal Opinions and Negative Assurance Letters 22 Comfort Letters 22 Engagement Letter with the Underwriters 23 KEY PARTIES 24 Issuer 24 Selling Stockholders 24 Management of the Issuer 24 Auditors 24 Underwriters 24 Legal Advisers 25 Other Parties 25 i Initial Public Offerings THE IPO PROCESS 26 Organizational or “Kick-Off” Meeting 26 The Due Diligence Review 26 Drafting Responsibility and Drafting Sessions 27 Filing with the SEC, FINRA, a Securities Exchange and the State Securities Commissions 27 SEC Review 29 Book-Building and Roadshow 30 Price Determination 30 Allocation and Settlement or Closing 31 Publicity Considerations -
IPO Or Divestiture: Making Informed Decisions
IPO or divestiture: Making informed decisions By Yael Woodward Amaral, Partner, Accounting Advisory, KPMG in Canada To divest or go public. It is a simple proposition with complex considerations. No doubt, pursuing an initial public offering (IPO) is a viable option for private equity (PE) funds looking to raise cash from a portfolio asset they are not ready to part ways with, but like any major portfolio decision, it pays to go in with eyes wide open. Taking the IPO journey has its merits. Current market “ Going public is not a panacea for conditions are making it more difficult for funds to operate on a debt leverage model approach at the same levels of return. difficult times. As anyone who has As such, going public may be a mechanism to extract capital ventured down the IPO path can from the asset while maintaining ownership. attest, it only means trading one set of challenges for another.” The true cost of going public Even still, going public is not a panacea for difficult times. Economy of scale As anyone who has ventured down the IPO path can attest, It is one thing to say your organization wants to be public it only means trading one set of challenges for another. and another to be ready for the costs, compliance, and Whether raising a million dollars or a billion, going public public scrutiny that entails. The massive shift in the reporting means becoming beholden to new rules, processes, public environment alone can be a significant challenge for the shareholders and regulators. This can be unfamiliar territory under-prepared, as it demands significant financial reporting for funds that are used to working in a more autonomous capabilities, controls, IT infrastructure, human resource environment and selling acquisitions when the numbers deem considerations and governance that simply cannot be it best. -
The Promise and Peril of Real Options
1 The Promise and Peril of Real Options Aswath Damodaran Stern School of Business 44 West Fourth Street New York, NY 10012 [email protected] 2 Abstract In recent years, practitioners and academics have made the argument that traditional discounted cash flow models do a poor job of capturing the value of the options embedded in many corporate actions. They have noted that these options need to be not only considered explicitly and valued, but also that the value of these options can be substantial. In fact, many investments and acquisitions that would not be justifiable otherwise will be value enhancing, if the options embedded in them are considered. In this paper, we examine the merits of this argument. While it is certainly true that there are options embedded in many actions, we consider the conditions that have to be met for these options to have value. We also develop a series of applied examples, where we attempt to value these options and consider the effect on investment, financing and valuation decisions. 3 In finance, the discounted cash flow model operates as the basic framework for most analysis. In investment analysis, for instance, the conventional view is that the net present value of a project is the measure of the value that it will add to the firm taking it. Thus, investing in a positive (negative) net present value project will increase (decrease) value. In capital structure decisions, a financing mix that minimizes the cost of capital, without impairing operating cash flows, increases firm value and is therefore viewed as the optimal mix. -
The Importance of the Capital Structure in Credit Investments: Why Being at the Top (In Loans) Is a Better Risk Position
Understanding the importance of the capital structure in credit investments: Why being at the top (in loans) is a better risk position Before making any investment decision, whether it’s in equity, fixed income or property it’s important to consider whether you are adequately compensated for the risks you are taking. Understanding where your investment sits in the capital structure will help you recognise the potential downside that could result in permanent loss of capital. Within a typical business there are various financing securities used to fund existing operations and growth. Most companies will use a combination of both debt and equity. The debt may come in different forms including senior secured loans and unsecured bonds, while equity typically comes as preference or ordinary shares. The exact combination of these instruments forms the company’s “capital structure”, and is usually designed to suit the underlying cash flows and assets of the business as well as investor and management risk appetites. The most fundamental aspect for debt investors in any capital structure is seniority and security in the capital structure which is reflected in the level of leverage and impacts the amount an investor should recover if a company fails to meet its financial obligations. Seniority refers to where an instrument ranks in priority of payment. Creditors (debt holders) normally have a legal right to be paid both interest and principal in priority to shareholders. Amongst creditors, “senior” creditors will be paid in priority to “junior” creditors. Security refers to a creditor’s right to take a “mortgage” or “lien” over property and other assets of a company in a default scenario. -
Global Corporate Divestment Study
2014 | ey.com/transactions EY | Assurance | Tax | Transactions | Advisory About EY GlobalEY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our Corporateclients and for our communities. EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information Divestmentabout our organization, please visit ey.com. Study About EY’s Transaction Advisory Services How you manage your capital agenda today will define Strategicyour competitive position tomorrow. divestments We work with clients to create social and economic value by helping them make better, more informed decisions about strategically managing capital and transactions in fast-changing drivemarkets. Whether value you’re preserving, optimizing, raising or investing capital, EY’s Transaction Advisory Services combine a unique set of skills, insight and experience to deliver focused advice. We help you drive competitive advantage and increased returns through improved decisions across all aspects of your capital agenda. © 2014 EYGM Limited. All Rights Reserved. EYG no. DE0493 ED 0115 This material has been prepared for general informational purposes only and is not intended to be relied upon as accounting, tax, or other professional advice. -
Announcement Has Been Approved for Release by the Board
ASX RELEASE 19 JULY 2021 ASX:NES RENOUNCEABLE RIGHTS ISSUE TO RAISE UP TO $2 MILLION • 2 for 7 Renounceable Rights Issue to raise up to $2 million • Attractively priced at 4.7 cents per share • Discount of 20% to the 10-day VWAP of 5.9 cents and 31% to the 90-day VWAP of 6.8 cents • With every two New Shares, shareholders receive one free attaching New Option • New Options will have Exercise Price of 8 cents, term of two years and will be listed • Shareholders can trade their rights and apply for additional shares and options • Rights to start trading from 23 July 2021 • Directors to participate for their full entitlement and will sub-underwrite a portion of the shortfall • Funds to be used to complete current drilling programs and expand upon the company’s exploration programs at its Woodline and Tempest projects. Nelson Resources Limited (ASX: [ASX]) (“Nelson Resources” or “the Company”) is pleased to announce a Renounceable Rights Issue to raise up to $2 million to fund completion of its current drilling programs and expand upon its exploration programs at its Woodline and Tempest projects. These expanded programs will include additional drilling and geophysics programs to be conducted with the company’s wholly owned drilling and geophysics equipment. Under the offer, shareholders will be offered two New Shares for every seven existing shares held on 26 July 2021 (“Record Date”), with one attaching listed Option, exercisable at $0.08 and expiring on 31 August 2023, for every two New Shares subscribed. The rights issue price represents a discount of: • 20% to the Company’s 10 day VWAP of $0.059; and • 31% to the Company’s 90 day VWAP of $0.068. -
Ma Divestment 4-1-2021
BPB 2021-013 BEM 405 1 of 23 MA DIVESTMENT 4-1-2021 DEPARTMENT POLICY Medicaid (MA) ONLY Divestment results in a penalty period in MA, not ineligibility. Divestment policy does not apply to Qualified Disabled Working Individuals (QDWI); see Bridges Eligibility Manual (BEM) 169. Divestment is a type of transfer of a resource and not an amount of resources transferred. Divestment means the transfer of a resource (see resource defined in this item and in glossary) by a client or his spouse that are all the following: • Is within a specified time; see look back period in this item. • Is a transfer for less than fair market value; see definition in glossary. • Is not listed under transfers that are not divestment in this item. Note: See annuity not actuarially sound and joint owners and transfers in this item and BEM 401 about special transactions considered transfers for less than fair market value. During the penalty period, MA will not pay the client’s cost for: • Long Term Care (LTC) services. • Home and community-based waiver services. • Home help. • Home health. MA will pay for other MA-covered services. Do not apply a divestment penalty period when it creates an undue hardship; see undue hardship in this item. RESOURCE DEFINED Resource means all the client’s and spouse's assets and income. It includes all assets and all income, even countable and/or excluded assets, the individual or spouse receive. It also includes all assets and income that the individual (or spouse) were BRIDGES ELIGIBILITY MANUAL STATE OF MICHIGAN DEPARTMENT OF HEALTH & HUMAN SERVICES BPB 2021-013 BEM 405 2 of 23 MA DIVESTMENT 4-1-2021 entitled to but did not receive because of action by one of the following: • The client or spouse. -
Climate Change: Active Stewardship Vs. Divestment
HNW_NRG_B_Inset_Mask Climate change: Active Stewardship vs. Divestment At RBC Global Asset Management (RBC GAM)1, we believe that climate change is a material and systemic risk that has the potential to impact the global economy, markets and society as a whole. As an asset manager and fiduciary of our clients’ assets, we have an important responsibility to consider all material factors that may impact the performance of our investments. In 2020, we took steps to formalize the actions we are taking to address climate change with the launch of Our approach to climate change. A cornerstone of this approach is active stewardship as an effective mechanism to motivate companies to build strategies that enable climate mitigation* and adaptation**. Some investors who are concerned about the impact of in extreme cases, the filing of lawsuits. As global investors climate change and are seeking to align their investment continue to integrate climate change into their investment strategies with these views have chosen a divestment decisions, active managers use both engagement and proxy approach. While RBC GAM does offer divestment solutions, voting as a means of better understanding and influencing we believe that the best approach to support the transition the activities or behaviour of issuers. to a low-carbon economy is through active stewardship. Engagement Active stewardship Engagement involves meeting with the boards and Active stewardship refers to the suite of actions investors management of issuers, typically corporations, and learning can take to better understand and influence the activities or about how they are approaching strategic opportunities and behaviour of issuers. It can be thought of as a conversation material risks in their business. -
Over 100 Global Financial Institutions Are Exiting Coal, with More to Come Every Two Weeks a Bank, Insurer Or Lender Announces New Restrictions on Coal
Tim Buckley 1 Director of Energy Finance Studies, Australasia 27 February 2019 Over 100 Global Financial Institutions Are Exiting Coal, With More to Come Every Two Weeks a Bank, Insurer or Lender Announces New Restrictions on Coal Executive Summary Today, over 100 globally significant financial institutions have divested from thermal coal, including 40% of the top 40 global banks and 20 globally significant insurers. Momentum is building. Since January 2018, a bank or insurer announced their divestment from coal mining and/or coal-fired power plants Global capital is fleeing every month, and a financial institution the coal sector. who had previously announced a divestment/exclusion policy tightened This is no passing fad. up their policy to remove loopholes, every two weeks. In total, 34 coal divestment/restriction policy announcements have been made by globally significant financial institutions since the start of 2018. In the first nine weeks of 2019, there have been five new announcements of banks and insurers divesting from coal. Global capital is fleeing the thermal coal sector. This is no passing fad. Since 2013 more than 100 global financial institutions have made increasingly tight divestment/exclusion policies around thermal coal. When the World Bank Group moved to exit coal in 2013, the ball started rolling. Following, Axa and Allianz become the first global insurers to restrict coal insurance and investment respectively in 2015, and their policies have subsequently been materially enhanced. Next, some 35 export credit agencies (ECA) released a joint statement agreeing to new rules restricting coal power lending. In the same year, the China-led Asian Infrastructure Investment Bank trumpeted its global green credentials with the Chairman confirming the Bank was in practice ruling out finance for coal-fired power plants. -
Divest from the Carbon Bubble? Reviewing the Implications and Limitations of Fossil Fuel Divestment for Institutional Investors1
Review of Economics & Finance Submitted on 24/12/2014 Article ID: 1923-7529-2015-02-59-22 Justin Ritchie, and Hadi Dowlatabadi Divest from the Carbon Bubble? Reviewing the Implications and Limitations of Fossil Fuel Divestment for Institutional Investors1 Justin Ritchie (Correspondence author) Institute for Resources, Environment and Sustainability, University of British Columbia 2202 Main Mall, Vancouver, BC V6T 1Z4, Canada Tel: +1-919-701-9872 E-mail: [email protected] Hadi Dowlatabadi Institute for Resources, Environment and Sustainability, University of British Columbia 2202 Main Mall, Vancouver, BC V6T 1Z4, Canada Tel: +1-778-863-0103 E-mail: [email protected] Homepage: http://blogs.ubc.ca/dowlatabadi/welcome/ Abstract: Climate change policies that rapidly curtail fossil fuel consumption will lead to structural adjustments in the business operations of the energy industry. Due to an uncertain global climate and energy policy framework, it is difficult to determine the magnitude of fossil energy reserves that could remain unused. This ambiguity has the potential to create losses for investors holding securities associated with any aspects of the fossil fuel industry. Carbon bubble risk is understood as financial exposure to fossil fuel companies that would experience impairments from assets stranded by policy, economics or innovation. A grassroots divestment campaign is pressuring institutions sell their fossil fuel company holdings. By September 2014, investors had responded by pledging to divest US $50 billion of portfolios. Though divestment campaigns are primarily focused on a moral and political rationale, they also regularly frame divesting as a strategy for mitigating stranded asset risk. We review aspects of the divestment movement alongside the context of carbon bubble risk. -
Capital Structure and the Financial Crisis
Journal of Finance and Accountancy Capital structure and the financial crisis Richard H. Fosberg William Paterson University ABSTRACT The financial crisis on the late 2000s had a major impact on the financial markets, greatly reducing security issuance by firms and lending by financial institutions. One of the consequences of the disruption of the capital and lending markets caused by the financial crisis was to significantly increase the amount of debt in firm capital structures. Specifically, it is shown that between 2006 and 2008 the financial crisis and simultaneous recession caused sample firms to increase their market debt ratios (MDRs) by, on average, 5.5%. After eliminating the effects of the recession on firm capital structure it was found that almost all (5.1%) of the debt accumulation that occurred was a consequence of the financial crisis. Additionally, it was found that the effect of the financial crisis on firm capital structure was almost completely reversed by the end of 2010. An analysis using book debt ratios (BDRs) found similar, but smaller, financial crisis effects. Copyright statement: Authors retain the copyright to the manuscripts published in AABRI journals. Please see the AABRI Copyright Policy at http://www.aabri.com/copyright.html. Capital structures, page 1 Journal of Finance and Accountancy INTRODUCTION In the late 2000s, a financial crisis began in the United States and quickly spread to Europe and other parts of the world (Aubuchon and Wheelock (2009)). The net effect of the financial crisis was to greatly disrupt the financial markets, reduce the amount of debt and equity capital financing available to businesses and to create a severe recession in the U.