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Issuer Stock Borrow Facilities

August 25, 2008

By Leveraged Finance Practice Group

Recently, a number of companies looking to raise money in the convertible debt markets have created side-by-side stock borrow facilities to improve the pricing terms of their convertible securities and increase the size of the fundraising. There are several ways to structure stock borrow facilities, the most common of which involve either stock lending programs or issuer-purchased share forward contracts. A stock borrow facility allows investors in the convertible offering the opportunity to hedge their convertible position through means other than a short sale of the issuers shares in the market.

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