Piggyback Warrants
Categories: Investing, Regulations
See: Piggyback Registration Rights.
It’s like those deals you get sometimes at checkout. Like, "You’ve been such a good customer at our medical-grade deodorant store, here’s a case of foot powder for 25% off." Only, in this case, it has to do with stocks or other securities.
A company issues a warrant to purchase stock. That gives the holder the right to purchase shares at a pre-set price. However, this particular warrant has a sweetener...a piggyback warrant. It's like an extra, added-on warrant.
The piggyback warrant provides a further opportunity to buy additional stock. Again, the stock purchase has a set price. In addition, these warrants often have a time limit.
Related or Semi-related Video
Finance: What is piggyback registration?2 Views
Finance allah shmoop What is piggyback registration Okay okay So
you know what Piggyback rides are right These things yet
a boon for back surgeons chiropractors and acupuncturists all in
one goofy stupid move Well piggyback securities registration works kind
of the same way A given stock is about to
be registered ahead of an initial public offering Yeah i
po and the pee There is not for piggyback although
it would be cool if it wass a bunch of
investors invested in the company while it was private and
employees received common stock options as part of their compensation
Will maybe some employees bought out those options and now
own common shares So there's an amalgam of different flavors
of shares out there more or less representing the same
thing You have preferred stock purchased by investing investors like
they paid cash up front which will all convert to
common stock when the company officially floats or goes public
And you have stock options that are bought out by
actual common shares owned by employees But then you have
the company selling newly printed common shares to the public
in this offering like whatever dot com has one hundred
Million shares in total now it's going toe print twenty
million new shares to sell to the public Thank you
xerox machine for running in the wee hours there So
those twenty million shares will of course be registered because
they're being sold to the public and their myriad rules
and regulations about selling things to mon pa kettle public
But then what about the hundred million sitting outside of
those twenty million that will be registered through myriad lawyers
with endless nighttime meetings in a lot of talk and
coffee Well what happens to those other hundred million Well
they essentially get piggyback registration writes on top of those
twenty million shares being registered they get them so that
they're all treated equally more or less as if they
were also registered along with those twenty million that went
through the painful aipo registration process where the lawyers you
know ask management to turn their head and cough and
do other invasive things Then all those shares once they've
been piggybacked and registered together are freely and readily tradable
when the proper windows opened for them to be traded
that is in most cases insiders can't sell their shares
On an open stock market under the rule one forty
four eight system which means that they have to wait
six months and change before they can sell them But
then they can sell them And when they can under
piggyback registration writes those shares would then be treated as
if they too were just normal Registered shares like the
ones that went out in the aipo courtesy of the
xerox machine And so the combined entity all looks about 00:02:47.298 --> [endTime] the same two way You know bear market