Floating over the Atlantic

On the 14 June 1995 official dealings commenced on the London Stock Exchange and the US Nasdaq National Market in the shares of Nynex Cable Comms, one of the UK's largest cable telecommunications and television companies. The offering raised about £383 million net of expenses.

The flotation involved three London law firms and two US firms. Simmons & Simmons and Chadbourne & Parke advised Nynex CableComms on UK and US law respectively. Slaughter and May acted as UK legal adviser to Nynex Corporation. Freshfields and Davis Polk and Wardell advised co-ordinators SG Warburg and Salomon Brothers on UK and US law respectively.

The Nynex flotation displayed some unusual features:

Stapling: the unitary method

Buy a share in Nynex CableComms and an investor acquires a share in both Nynex CableComms Group Inc and Nynex CableComms Group plc which are traded together as a unit. Established to ease tension between US and UK regulatory regimes, this structure enabled Nynex Corporation, the parent company of Nynex CableComms, to reorganise the Nynex CableComms business for flotation without recognising a gain for US tax purposes; it also enabled Nynex CableComms to apply for inclusion in the UK FTSE indices.

Dual listing

To maximise demand for the units, it was decided to seek a dual listing on the London Stock Exchange (LSE) and on Nasdaq thus having to meet the rigorous demands of both the Securities and Exchange Commission and the LSE. The LSE also created specific rules for cable companies to satisfy.

Independence

In line with LSE requirements, most Nynex CableComms directors are independent of Nynex Corporation and remuneration and audit committees were set up to comply with the Cadbury Code.

Dividends

The proceeds of cable offerings are used to finance the continued construction of cable networks. Nynex CableComms, like other publicly traded UK cable companies, is unlikely to pay a dividend in the foreseeable future.

Bookbuilding

This US marketing style was adopted. The shares are priced at the end of the marketing period and without underwriters being committed. In this offer, marketing was carried out on an indicative price range basis.

The offering document

Nynex CableComms' units were marketed in the US on the basis of a US-style registration statement and in the UK on the basis of UK-style listing particulars. The content of the two documents was almost identical save for cultural and regulatory differences.

Targeting smaller investors

Up to 25 per cent of shares on offer were available to meet demand from the public through intermediaries such as share shops. The publication of listing details at the start of the bookbuilding period allowed the issue of a mini prospectus to promote units in the retail offer. Investors were given a range of prices at which they could subscribe to. Any application at a price lower than the eventual fixed price would fail.

Pricing based on demand

This took place on 9 June at the end of the bookbuilding period and final form offering documents (supplementary listing particulars in the UK and a registration statement in the US) were published at this time.

Sarah Bowles is a solicitor at Simmons & Simmons corporate department.