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Pepper Hamilton LLP Corporate & Securities Law Alert

Access to the U.S. Capital Markets by Foreign Issuers: A Guide to Rule 144A and Regulation S Offerings

Public and private entities can access the U.S. capital markets without registering the offering with the U.S. Securities and Exchange Commission (SEC) by issuing securities under Rule 144A and/or Regulation S of the U.S. Securities Act of 1933, as amended (the Securities Act). Rule 144A offerings are typically used to offer non-convertible or convertible debt and preferred stock.

Rule 144A and Regulation S offerings are frequently conducted simultaneously and give an issuer the flexibility to offer its securities inside the United States in reliance on Rule 144A at the same time as it offers its securities outside the United States in reliance on Regulation S. These offerings are particularly attractive to issuers of debt in low-interest-rate environments.

Private entities, including foreign issuers, view Rule 144A and Regulation S offerings favorably because such offerings provide an opportunity to raise capital without subjecting themselves to the burdensome periodic filing requirements of the SEC or the internal controls requirements imposed by the Sarbanes-Oxley Act of 2002 (SOX). Because of the absence of SEC registration and review, Rule 144A and Regulation S offerings are also typically accomplished at a lower cost than a registered U.S. underwritten offering.

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Robert A. Friedel |
Alexander D. Gonzalez |