Form 424B5 prospectus supplement
Also called: 424B5, prospectus supplement, 424(b)(5), pro supp
A prospectus supplement filed under SEC Rule 424(b)(5) to document a specific offering made off an effective shelf, stating the securities sold, the price and the use of proceeds.
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What it is
A shelf registration registers securities in general terms. When the company actually sells some, it files a prospectus supplement that fills in the details of that offering. Rule 424(b) has several paragraphs for different situations; paragraph (b)(5) covers supplements that add or change information about the offering, which is why most shelf takedowns appear on EDGAR as form type 424B5.
The supplement generally has to be filed no later than the second business day after pricing or first use, so it often appears on EDGAR the morning after a deal is priced.
What is inside
- Cover page: the securities offered (common stock, pre-funded warrants, warrants), the price, the agent or underwriter, and the gross proceeds.
- The offering summary: shares outstanding before and after, and the warrant terms.
- Use of proceeds: what the company says it will do with the money.
- Dilution section: the per-share dilution to new investors measured against net tangible book value.
- Baby shelf disclosure: for smaller issuers, the public float calculation and amounts sold in the prior 12 months.
- Plan of distribution: fees and agent compensation.
ATM programs also use a 424B5 to establish the program size, and further supplements may be filed as it is increased.
Worked example
Hypothetical: a 424B5 for Company X states "shares outstanding before this offering: 40,000,000; shares offered: 6,000,000; shares outstanding after: 46,000,000". That is a 15% increase in the basic share count, before counting any warrants sold in the same deal.
How to spot it
Search EDGAR or the Signal8 SEC filings feed for form type 424B5. Read the cover and the "The Offering" summary first. The guide Reading a 424B5 walks through one section by section.
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