NASD makes first move towards going public

Begins member vote on restructuring and Nasdaq private placement

By: IE Staff
March 13, 2000 March 13, 2000
11:20

(March 13 – 11:20 ET) – The National Association of Securities Dealers Inc. has taken a big step toward restructuring and going public. This morning the NASD launched the member vote on its proposed restructuring and opened the subscription period for a Nasdaq private placement.

Nasdaq is planning a two-part private placement to a limited number of market participants, issuers, and all NASD members. In Phase 1 of the private placement, approximately 47%-49% of the stock will be sold. Shares and warrants will be sold at fair market value, as determined by both J.P. Morgan Securities Inc. and Salomon Smith Barney, advisors to the Fairness Committee of the NASD Board of Governors and the NASD respectively.

Nasdaq currently expects that 130 strategic market participants will be offered a total of 30% to 32% of the stock, 130 issuers will be offered 16%, and all NASD members in good standing will carve up 25% on a pro rata basis with each member also having the opportunity to purchase warrants on 6,000 shares over the two phases of the deal. If the Nasdaq later decides to go public another 8% will be allocated to NASD membership.

Nasdaq will also apply to register as an exchange. A meeting has been scheduled for April 14 to consider the restructuring and hold the vote. It’s a one firm one vote procedure. If the restructuring is approved it will be implemented immediately and the first phase will be completed in late April or May. Nasdaq expects to approved as an exchange by fall, along with the closing of the second stage.

A private placement memorandum has been mailed to all NASD members and potential investors for the first phase of Nasdaq’s private placement. Stock allocations will generally be tied to member contributions to the revenues of Nasdaq and the NASD.

“Today marks an historic day for the NASD and its members. I urge members, both large to small, to consider the materials they will soon receive and vote ‘for’ the restructuring. It is a win-win-win for NASD members, issuers, and investors,” said NASD chair and CEO Frank Zarb.