Overview

As the financial markets began to emerge from the latest economic crisis,
issuers increasingly employed at-the-market continuous equity financing
programs to raise capital. Also known as sales agency programs or equity
“dribble-outs,” as well as by many acronyms (such as “SAFE” programs
or “ATM equity”), these financing programs are designed to allow issuers
to quickly and opportunistically access equity markets, especially during
periods of high volatility when a “traditional” equity issuance may not be
economically attractive. Continuous equity financing programs also allow
issuers to raise equity capital as the need arises by selling shares of their
common stock from time to time through a designated broker-dealer sales
agent at current market prices. Issuers often find these programs attractive
because they give issuers considerable control over the timing, amount
and price of each issuance and sale of their common stock. Continuous
equity financing programs will likely not completely replace the traditional
follow-on equity offering, since the capacity of a continuous equity
financing program is limited by the issuer’s market liquidity (a combination
of average daily trading volume and share price). The programs, however,
do provide a supplemental means to access equity capital.