Solv Energy moves to elude US government shutdown
Solv Energy pre-filed launch terms Friday with the SEC outlining a US$512.5m all-primary Nasdaq IPO, providing it with a contingency to regulatory flexibility given the US government shutdown.
The engineering and construction firm initially filed to go public January 16, meaning it technically could not launch marketing until Monday, February 2, after the 15-day mandatory viewing period lapses.
“The situation is a bit nuanced,” one banker involved in the offering process told IFR. “The Senate isn’t meeting this weekend, so there’s no certainty about the SEC operating on Monday.”
ECM bankers, lawyers and issuers are well-versed in the challenges of going public during a government shutdown, having navigated a 43-day shutdown in October/November.
Solv is “solving” for that prolonged gestation of going public by getting SEC sign-off on the terms.
Jefferies and JP Morgan, as joint-lead bookrunners, publicly filed to sell 20.5m new shares at US$22–$25. The banks formally launched marketing of the deal on Monday for pricing after the market close next Tuesday, February 10.
That the deal is all-primary makes the decision to “pre-file” a sensible move, given materiality within the safe harbor provision to upsize/downsize the offering size by 20%.
Latham & Watkins is providing legal counsel to the underwriters and Weil Gotshal & Manges is advising Solv.
SpyGlass Pharma, another Jefferies client, pre-filed launch terms last Thursday on the sale of 9.4m shares to be marketed at US$15–$17, ahead of launching on Monday for pricing after the market close this Thursday, February 5. The move to pre-file was timed ahead of the expiry of the 15-day viewing period over this past weekend.
The SEC division of corporate finance Friday refreshed a primer on “Actions in Advance of a Potential Government Shutdown”.
Companies had until 4:00pm Friday, January 30, to “request acceleration of effectiveness”, as outlined in the primer. The acceleration request would only be allowed if “there are no outstanding staff comments on the registration statement”.
Removing the so-called delaying amendment is another, higher-risk way to go public. That option grants immediate effectiveness to a company's IPO registration statement 20 days after the delaying amendment is removed.
There were eight companies that went public during the October-November shutdown by dropping the delaying amendment, beginning with MapLight Therapeutics’ US$250m Nasdaq IPO October 26, according to IFR data.
The problem with the delaying amendment option is that companies are treated as a public company even if their IPO does not price, obligating them to file regular quarterly/annual and other securities filings.
The potential for a government shutdown comes after Congress failed to pass a slate of funding bills by Friday, January 30, to keep the government open past Saturday, January 31. A key stumbling block is a funding package for the Department of Homeland Security following the high-profile shooting of Alex Pretti.