Subject category:
Finance, Accounting and Control
Published by:
Harvard Business Publishing
Version: 26 January 2006
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Abstract
Times Mirror Co (TMC) owns a substantial block of Netscape common stock purchased prior to Netscape's initial public offering, on which it has substantial unrealized gains. TMC is restricted from selling the stock in a public offering and is therefore considering a proposal by Morgan Stanley to issue Premium Equity Participating Securities (PEPS) to monetize its Netscape holdings. These PEPS would pay interest quarterly and be redeemable in five years at a price tied to the value of Netscape shares, subject to certain formulas and call provisions effectively apportioning the upside in Netscape stock between TMC and the PEPS investors. The tax treatment of the PEPS, while unclear, is of significant importance.
Location:
Other setting(s):
1995-1996
Subject category:
Finance, Accounting and Control
Published by:
Harvard Business Publishing
Length: 14 pages
About
Abstract
Times Mirror Co (TMC) owns a substantial block of Netscape common stock purchased prior to Netscape's initial public offering, on which it has substantial unrealized gains. TMC is restricted from selling the stock in a public offering and is therefore considering a proposal by Morgan Stanley to issue Premium Equity Participating Securities (PEPS) to monetize its Netscape holdings. These PEPS would pay interest quarterly and be redeemable in five years at a price tied to the value of Netscape shares, subject to certain formulas and call provisions effectively apportioning the upside in Netscape stock between TMC and the PEPS investors. The tax treatment of the PEPS, while unclear, is of significant importance.
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Location:
Other setting(s):
1995-1996
Related
Subject category:
Finance, Accounting and Control
Published by:
Harvard Business Publishing
Length: 14 pages