Section 3(a)(9) exchange offers

Many issuers currently are trying to restructure and strengthen their balance sheets in light of the financial crisis. Exchange offers pursuant to Section 3(a)(9) of the Securities Act of 1933 offer a number of advantages over other types of exchange offers and restructuring options. In an exchange offer, the issuer offers to exchange new debt or equity securities for its outstanding debt or equity securities. An exchange offer also involves the offer of new securities, it must comply with, or satisfy an exemption from, the registration requirements of the Securities Act of 1933 (Securities Act). Section 3(a)(9) of the Securities Act applies to "any securities exchanged by the issuer with its existing security holders exclusively when no commission or other remuneration is paid or given directly or indirectly for soliciting such exchange. A redemption standby agreement between an issuer and an investment bank can be combined with an exchange of securities under Section 3(a)(9).