Methods, systems and securities for assuring a company an opportunity to sell stock after a specified time
View Patent ↗Methods, systems and securities for assuring a company an opportunity to sell stock (e.g., common stock) after a specified time are disclosed. In one embodiment, a sale, by a company to an other entity, of a security may be issued, consisting of: (i) a post-paid forward contract which obligates the other entity to purchase a fixed number of shares stock of the company; and (ii) debt. In one embodiment, a purchase, by the company from the other entity, of a paid forward contract may be issued, which obligates the other entity to deliver to the company a variable number of shares of stock in the company. The number of shares underlying the pre-paid forward contract may be calculated based on a formula that is a function of a then-current stock price and a remaining maturity associated with the pre-paid forward contract.
1. A method implemented by a computer system comprising:
inputting data via a computer system regarding a sale, by a company to an other entity, of a security consisting of: (i) a post-paid forward contract which obligates the other entity to purchase a fixed number of shares stock of the company; and (ii) debt;
inputting data via the computer system regarding a purchase, by the company from the other entity, of a pre-paid forward contract which obligates the other entity to deliver to the company a variable number of shares of stock in the company;
inputting via the computer system a then-current stock price associated with the stock of the company;
calculating via the computer system a number of shares underlying the pre-paid forward contract, based on a formula that is a function of a then-current stock price and a remaining maturity associated with the pre-paid forward contract wherein the formula is pre-specified;
recording via the computer system the data regarding the sale, by the company to the other entity, of the security consisting of: (i) the post-paid forward contract; and (ii) the debt;
recording via the computer system the data regarding the purchase, by the company from the other entity, of the pre-paid forward contract; and
recording via the computer system the calculated number of shares underlying the pre-paid forward contract;
wherein the pre-paid forward contract comprises a call option.
2. The method of claim 1 , wherein the stock of the company is common stock in a public company.
3. The method of claim 1 , wherein the post-paid forward contract obligates the company to sell and the other entity to purchase, at maturity of the post-paid forward contract, a fixed number of shares of stock in the company for a fixed price.
4. The method of claim 3 , wherein the fixed price equals a face amount of the debt.
5. The method of claim 1 , wherein the company pays, to the other entity, a contract fee on the post-paid forward contract.
6. The method of claim 5 , wherein the contract fee is paid once.
7. The method of claim 5 , wherein the contract fee is paid periodically at a time selected from the group including: (a) daily; (b) weekly; (c) monthly; (d) quarterly; (e) semi-annually; and (f) annually.
8. The method of claim 1 , wherein the debt is initially pledged as collateral to secure the obligations of the other entity under the post-paid forward contract.
9. The method of claim 8 , wherein the other entity has the right to recollateralize the post-paid forward contract.
10. The method of claim 1 , wherein the debt pays a fixed cash coupon, subject to reset.
11. The method of claim 10 , wherein the coupon is paid periodically at a time selected from the group including: (a) daily; (b) weekly; (c) monthly; (d) quarterly; (e) semi-annually; and (f) annually.
12. The method of claim 11 , wherein the coupon is reset and the debt is remarketed.
13. The method of claim 1 , wherein the pre-paid forward contract obligates the other entity to deliver to the company a variable number of shares of stock in the company depending on a price of the stock at maturity of the pre-paid forward contract.
14. The method of claim 13 , wherein the company pre-pays the purchase price of the stock and need not pay for the stock at the time of delivery.
15. The method of claim 14 , wherein at least a portion of the purchase price of the stock is paid to the other entity at the time of issuance of the pre-paid forward contract with the remaining portion funded through periodic contract payments.
16. The method of claim 15 , wherein the contract payments are paid periodically at a time selected from the group including: (a) daily; (b) weekly; (c) monthly; (d) quarterly; (e) semi-annually; and (f) annually.
17. The method of claim 1 , wherein, prior to maturity of the pre-paid forward contract, the company has the right to fix the number of shares underlying the pre-paid forward contract, based on a formula that is a function of a then-current stock price and a remaining maturity associated with the pre-paid forward contract.
18. The method of claim 1 , wherein the post-paid forward contract and the debt are initially pledged as collateral to secure the obligations of the other entity to deliver stock pursuant to the pre-paid forward contract.
19. The method of claim 18 , wherein the other entity has the right to recollateralize the pre-paid forward contract with common stock of the first company.