Votes on proposals regarding private placements should be determined on
a CASE-BY-CASE basis. When evaluating these
proposals the investor should review:
-
Dilution to existing shareholders' position
-
Terms of the offer - discount/premium in purchase price to investor,
including any fairness opinion; conversion features; termination
penalties; exit strategy
-
Financial issues - company's financial situation; degree of need for
capital; use of proceeds; effect of the financing on the company's cost
of capital
-
Management's efforts to pursue alternatives such as mergers
-
Control issues - change in management; change in control, guaranteed
board and committee seats; standstill provisions; voting agreements;
veto power over certain corporate actions
-
Conflict of interest - arm's length transaction, managerial
incentives
Vote FOR the private placement if it is expected
that the company will file for bankruptcy if the transaction is not
approved.
