New SEC Relief for Some Companies That May Lose WKSI Status

January 9, 2009

Due to continuing equity market turmoil, many companies are at risk of losing the ability to issue securities off of an automatic shelf registration statement.  When a company files its annual report on Form 10-K or Form 20-F, a new determination date for well-known seasoned issuer (WKSI) status is triggered.  To remain eligible to use an existing automatic shelf, the company’s worldwide equity float must equal or exceed $700 million, excluding shares held by affiliates, at a point during the preceding 60 days.

After discussions with the SEC staff, the staff provided us with guidance on the following steps that such a company can take in order to preserve its ability to access the U.S. public capital markets (provided it remains eligible to use a non-automatic shelf registration statement):

1. Prior to filing its annual report, the company must file a post-effective amendment to its automatic shelf (which will become automatically effective), which conforms the automatic shelf in all respects to the requirements of a non-automatic shelf registration statement filed by a seasoned issuer that is not a WKSI.
2. Promptly after filing its annual report, the company must file either:
• a new non-automatic shelf registration statement on Form S-3 or Form F-3, or
• a second post-effective amendment to its existing shelf

Either filing would be subject to SEC review before being declared effective, and would presumably be largely the same as the post-effective amendment referred to in step 1.

According to the SEC staff, a company that complies with these steps may continue to sell securities under its automatic shelf registration statement, until the new shelf registration statement (or second post-effective amendment) is declared effective. We expect the SEC staff to confirm this guidance in writing.

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If you have any questions about the matters covered in this newsflash, please contact any of the lawyers listed below or your regular Davis Polk contact.

Joseph Hall, Partner
212-450-4565 | joseph.hall@dpw.com

Michael Kaplan, Partner
212-450-4111 | michael.kaplan@dpw.com

Richard Sandler, Partner
212-450-4224 | richard.sandler@dpw.com

Richard D. Truesdell, Jr., Partner
212-450-4674 | richard.truesdell@dpw.com

Davis Polk & Wardwell

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