Northstar Realty Finance Corp (NYSE:NRF) adding real value with private offering, Newcastle Investment Corp (NYSE:NCT)
On June 14, 2013 Northstar Realty Finance Corp (NYSE:NRF) announced that its operating partnership via which NRF conducts its operations, Northstar Realty Finance Limited Partnership, has priced a private offering of $300M principal amount of its 5.37 percent exchangeable senior notes that are due in 2033. The Operating Partnership has granted the initial purchasers of the Notes, a 30-day option to acquire upto an additional $45M principal amount worth of Notes in order to cover any over-allotments.
The net proceeds of the offering are expected to be used to make business-related investments. This includes the acquisition of the limited partnership’s pending interests. It has interests in almost 25 real-estate private equity funds that had been announced on 12, June 2013. In addition to this, the proceeds may also be used for repurchasing or paying its liabilities and for other general corporate purposes.
What are private stock offerings?
A lot of companies offer them but very few people are actually aware of the muscle that private stock offerings have in raising capital for various business ventures. Today, it is relatively easy to actually produce these private offerings and raise the necessary cash.
Why do companies offer them?
A private placement such as this is exempted from federal registration, which in effect simplified the process to a great degree. In 1982, Regulation D was adopted by the SEC. This set the objectives as well as the quantifiable rules for all the exemptions from federal registration. Offerings that are exempt under these specific rules have now become the most common time and cost-saving tools for small and growing businesses to raise cash from its private investors.
A different strategy
Another company from the same industry, Newcastle Investment Corp. (NYSE:NCT) announced that it intends to make a public offering of 30,000,000 common stock shares. NCT also intends to grant its underwriters a 30 days option to acquire an additional of upto 4,500,000 common stock shares.
The net proceeds from this offering are intended to be used for general corporate purposes, such as for making different investments, acquisitions of some senior housing properties, real estate loans and securities, CDO debt, operating businesses or even other assets.