Best governance around a corporate transaction Quantum Corporation
When describing complex corporate transactions, it’s often best to start at the end. In the case of this year’s award winner for best governance around a corporate transaction, that means stating that Quantum Corporation conducted a rights offering that raised roughly $67.5 mn through the sale of 30 mn shares of its common stock to its existing stockholders.
According to law firm Pillsbury Winthrop Shaw Pittman, which advised Quantum, the offering was oversubscribed and one of only a half-dozen similar deals completed in the US in the past 15 years. In a rights offering, a company distributes one subscription right for each outstanding share of common stock to buy a specified number of shares, or fraction of a share, at a specified subscription price.
Pillsbury describes Brian Cabrera, chief administrative officer and formerly chief legal and compliance officer of Quantum, as playing a central role in setting up a process for Quantum and its board to assess a variety of financing options.
‘The governance around the board’s decision-making on how to structure Quantum’s financing and how to proceed with its lenders was extremely sensitive, because any financing was sure to be significantly dilutive to existing stockholders and/or place a significant strain on Quantum’s balance sheet,’ the law firm’s submission explains.
Cabrera therefore created a process for Quantum to engage with its largest shareholders and debt holders to agree on a financing structure that would meet all of the firm's needs in raising capital, restructuring outstanding debt and treating its shareholders and lender fairly. At the same time as the rights offering was taking place, Cabrera worked with lenders to restructure the outstanding debt.
‘Cabrera’s role of advising Quantum’s board through a very difficult set of circumstances and tough decisions, while at the same time establishing such a productive communication channel with Quantum’s main stakeholders, was invaluable to Quantum completing the rights offering, restructuring the debt and [giving] Quantum the flexibility to withstand a challenging operating environment and continue to try to execute its business objectives,’ Pillsbury writes.
