Google Inc. (GOOG) may have
illegally issued more than 23 million shares of its stock to hundreds of
employees and consultants, injecting an unexpected legal risk into the online
search engine leader's highly anticipated IPO.
The Mountain View-based company
disclosed the possible violations Wednesday in a prospectus offering to buy
back the affected shares and outstanding stock options for a total of $25.9
million, including interest payments.
million in cash as of June 30, Google can easily afford to make amends.
But it's uncertain whether the gesture
will satisfy everyone affected by potential bureaucratic blunders that
occurred from September 2001 through June 2004.
During that time, the company
says it neglected to register 23.2 million shares of common stock and 5.6
million outstanding stock options with securities regulators. The oversights
might have broken federal and state laws, according to Wednesday's filing. The
affected common stock is owned by 1,105 current and former employees, as well
as company consultants.
Google warned that its buyback,
or "recission," offer may be rejected by some people who prefer to
sue the company. Google believes it faces potential liabilities in 18 states
and the District of Columbia, as well as federal court.
It's unclear whether Wednesday's twist
will affect the timing of Google's initial public offering - a deal expected
to raise up to $3.3 billion, with roughly half of the money flowing into the
company's bank accounts. The rest of the money will be split up among Google's
top executives and early investors who plan to sell stock in an IPO carrying a
target price of $108 to $135 per share.
In Wednesday's filing, Google
said it planned to complete the IPO "as soon as practicable," but
didn't elaborate. Federal securities law prohibits Google from making public
statements about the IPO beyond the information contained it SEC filings. The
company's latest filing indicated the recission offer will expire sometime
Google is currently letting
prospective bidders register for an upcoming auction of 24.6 million IPO
shares at .http://www.ipo.google.com
Once the registration period
closes - something that could happen later this week - qualified investors can
bid to buy a minimum of five shares through one of 28 underwriters
participating in the IPO. If the auction is completed in a few days, Google's
shares could begin trading on the Nasdaq Stock Market as early as next week.
successful IPO might make the recission offer a moot point. Wednesday's
filing said the stockholders that reject or don't respond to the recission
offer will have their shares and option automatically registered under federal
securities law after the IPO is completed. The shares then would become
tradable after the recission offer expires next month.
The offer applies to 1,105
current and former employees, as well as company consultants, who own the
affected common stock. The options, carrying exercise prices ranging from 30
cents to $80 per share, are held by 301 people.
mailings, click here
Ixquick submits your search to the major search
engines and finds sites that are universally ranked in
the top ten!
Search66 is Australia's parallel search engine. Find
what you're looking for on the Net in Australia (or
the world) first time - every time!
The Mother of All Search Engines.
eCommerce and software solutions.
professional search engine submission service.