Offering Memorandum for Warrants

Offering Memorandum for Warrants

An offering memorandum for a company selling warrants is often needed in order to raise capital from investors.’s team has been involved in the creation and implementation offering memorandum and prospectus documents for warrant offerings worldwide and can ensure your offering memorandum is structured correctly.

What is a Warrant?

A warrant is security that once purchased by an investor allows her/him to buy a stock or securities at a fixed price, called an exercise price, which can remain that price until the expiration date. Said another way, a warrant gives the investor the ability to buy stock at a set price, usually early on in the company until the warrants expire. Warrants are considered advantageous in comparison to common stock. Warrants are also assigned to bonds and preferred shares or stock as an incentive to the investors, as this often allows the issue to pay dividends or lower interest payments.

OM – Offering Memo

The OM, as it is also referred to, or the “offering memo”, is document that outlines the sale of the company’s securities such as warrants. Such a document would include detailed information on the company’s securities being offered, the pricing of the securities, the market of the company, the management team and much more. The offering memorandum is an all-inclusive document that if warranted can be given as a single document to an investor who in turn can choose to invest based off the offering memorandum.

Different Types of Offering Memorandum for Warrants

Equity: an equity offering memorandum is often used for companies who are selling shares, such as common stock or common shares, or for various funds such as hedge funds or mutual funds. An equity transaction is when a company normally sells an ownership type stake in a company. While this is the case for many public transactions via an IPO – where if you buy stock on the public market you are a part owner of the company – for funds this is not necessarily the case. Funds such as hedge funds may sell equity in the form of participating shares (even many classes of shares) but this does not necessarily grant ownership or even voting rights to the investor. For all private transactions relating to the sale of securities a document is necessarily to be given to an investor in order for him/her to make an educated decision about investing. While the prospectus is one such document and the private placement memorandum another, the offering memorandum is often given as well.

Debt: For those companies that issue debt securities in the form of, for example, bonds, convertible bonds, notes, debentures and other securities offering types, an offering memorandum is also needed. The OM will detail the amount one is raising, the maturity date, interest rates and many other variables and characteristics, including information, if need be, on clearing and settlement and depository services.

Worldwide Term Usage

The usage and popularity of the term offering memorandum is understood worldwide to mean a document, referred to as a “memorandum”, which details what the company is “offering” in return for investment capital. Read it backwards and you get “memorandum offering”, i.e. a document detailing the offering of securities. In addition to the term offering memorandum the most popular word for such a document is a prospectus and an offering circular and a private placement memorandum, as well a red herring and others are also employed.

Subscription Agreement for Warrants

Finally, each offering memorandum will include the subscription agreement, which is a document that is essentially the contract between the investor and the company selling securities. The subscription agreement outlines the terms, and has numerous places for the investor to fill out and usually gives instruction where to send a check for subscribing to the securities, or bank wire details. The subscription agreement is also of great important to the offering memorandum, and in many cases is considered the “shoes” of the documents, while the rest of the memorandum is the clothes. Said another way, without a subscription agreement there can be no transaction between an investor and the company, i.e. something is missing from the memorandum if there is no subscription agreement.

Prospectus’ team of consultants and lawyers can help draft your offering memorandum for either debt or equity issuance and warrants in an effective, fast and cost affordable way.

Contact us for a free consultation