Special maturity ASR recalculated timing
First Claim
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1. A method of providing a company with a large quantity of stock shares issued by the company by borrowing the large quantity of shares from a lender and gradually repurchasing small quantities of the shares from the market in order to settle with the lender, the method comprising:
- receiving, from the company, a request for a first quantity of shares issued by the company;
communicating, to the company, at least one dividend limit associated with the shares;
communicating, to the company, a maturity window consisting of a start maturity date and an end maturity date, the maturity window being subject to change upon the at least one dividend limit associated with the shares being exceeded;
receiving, from the company, compensation associated with a second quantity of shares issued by the company;
borrowing, from at least one lender, the second quantity of shares issued by the company;
conveying the second quantity of shares to the company;
purchasing a plurality of quantities of the shares at market value;
detecting that one or more ordinary dividends associated with the shares and declared by the company exceeds the at least one dividend limit;
computing, using a computer, a value of an outstanding transaction with the company, the outstanding transaction comprising a potential revised maturity date;
setting, as a consequence of said detecting and based on the computing, a revised maturity date outside of the maturity window;
calculating a settlement number of shares as a difference between (1) a number of shares corresponding to the compensation and an average share value and (2) the second quantity of shares, wherein the average share value is determined over a time period associated with the revised maturity date;
compensating the company if the settlement number of shares is negative;
receiving compensation from the company if the settlement number is positive; and
settling with the at least one lender.
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Abstract
An system for and method of repurchasing stock is presented. The system and method improve upon prior art techniques by limiting risk to an investment bank that enables an accelerated stock repurchase. More particularly, such risk is reduced in the event that the repurchasing company announces higher than expected dividends on the stock during the term of the accelerated repurchase transaction.
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Citations
9 Claims
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1. A method of providing a company with a large quantity of stock shares issued by the company by borrowing the large quantity of shares from a lender and gradually repurchasing small quantities of the shares from the market in order to settle with the lender, the method comprising:
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receiving, from the company, a request for a first quantity of shares issued by the company; communicating, to the company, at least one dividend limit associated with the shares; communicating, to the company, a maturity window consisting of a start maturity date and an end maturity date, the maturity window being subject to change upon the at least one dividend limit associated with the shares being exceeded; receiving, from the company, compensation associated with a second quantity of shares issued by the company; borrowing, from at least one lender, the second quantity of shares issued by the company; conveying the second quantity of shares to the company; purchasing a plurality of quantities of the shares at market value; detecting that one or more ordinary dividends associated with the shares and declared by the company exceeds the at least one dividend limit; computing, using a computer, a value of an outstanding transaction with the company, the outstanding transaction comprising a potential revised maturity date; setting, as a consequence of said detecting and based on the computing, a revised maturity date outside of the maturity window; calculating a settlement number of shares as a difference between (1) a number of shares corresponding to the compensation and an average share value and (2) the second quantity of shares, wherein the average share value is determined over a time period associated with the revised maturity date; compensating the company if the settlement number of shares is negative; receiving compensation from the company if the settlement number is positive; and settling with the at least one lender. - View Dependent Claims (2, 3, 4)
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5. A method of providing a company with a large quantity of stock shares issued by the company by borrowing the large quantity of shares from a lender and gradually repurchasing small quantities of the shares from the market in order to settle with the lender, the method comprising:
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receiving, from the company, a request for a first quantity of shares issued by the company; communicating, to the company, a maturity window consisting of a start maturity date and an end maturity date, the maturity window being subject to change upon a first dividend limit associated with the shares being exceeded; communicating, to the company, floor amount, the floor amount being subject to change upon a second dividend limit associated with the shares being exceeded; receiving, from the company, compensation associated with a second quantity of shares issued by the company; borrowing, from at least one lender, the second quantity of shares issued by the company; conveying the second quantity of shares to the company; purchasing a plurality of quantities of the shares at market value; detecting that one or more ordinary dividends associated with the shares and declared by the company exceeds the at least one dividend limit; computing, using a computer, a value of an outstanding transaction with the company, the outstanding transaction comprising one or both of a potential revised maturity date and a potential revised floor amount; setting, as a consequence of said detecting and based on the computing, a revised maturity date outside of the maturity window; adjusting, as a consequence of said detecting and based on the computing, the floor amount; determining, as an effective share value, the greater of the floor amount and an average share value, wherein the average share value is determined over a time period associated with the revised maturity date; calculating a settlement number of shares as a difference between (1) a number of shares corresponding to the compensation and the effective share value and (2) the second quantity of shares; compensating the company if the settlement number of shares is negative; receiving compensation from the company if the settlement number is positive; and settling with the at least one lender. - View Dependent Claims (6, 7, 8, 9)
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Specification