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Panda Ethanol Case Study. Purpose of the Case Study. Illustrates how A private firm can use a reverse merger in lieu of an IPO to go public Private investment in public equity (PIPES) may be used to finance ongoing operations following the reverse merger

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Presentation Transcript
purpose of the case study
Purpose of the Case Study

Illustrates how

  • A private firm can use a reverse merger in lieu of an IPO to go public
  • Private investment in public equity (PIPES) may be used to finance ongoing operations following the reverse merger
  • Reverse splits can be used to achieve agreed upon ownership distributions
  • Purchasing stock in the prior to a merger proposal can be used to influence the outcome
key participants
Key Participants
  • Panda Ethanol
  • Grove Street Investors
  • Grove Panda LLC
  • Cirracor
merger terms
Merger Terms
  • One share of Panda Ethanol common for each share of Cirracor common
  • Cirracor shareholders to own 4% of newly issued and outstanding common stock of the surviving company
  • Panda Ethanol shareholders to own remaining 96%
  • Panda Ethanol to issue 15 million new shares through a private placement valued at $90 million
  • Total Panda Ethanol shares outstanding:

--13.8 million existing shares

--15.0 million new shares

  • Total Cirracor shares outstanding: 3.5 million
discussion questions
Discussion Questions
  • Discuss the pros and cons of a reverse merger versus an initial public offering for taking a company public.
  • Why did Panda Ethanol undertake a private equity placement totaling $90 million shortly before implementing the reverse split?
  • How were the Panda Grove investment holdings used to influence the outcome of the proposed merger?
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