In a very interesting move, independent VoIP provider Vonage, which has filed for an initial public offering (IPO), is offering its customers shares in the company’s stock at the IPO price. Vonage sent an email to its customers this morning stating
As you may know, Vonage has filed a registration statement with the Securities and Exchange Commission (SEC) related to its proposed initial public offering (IPO) of common stock. Because much of our success is attributable to our customers, we have asked the underwriters of the IPO to reserve shares of common stock for sale to certain Vonage customers at the IPO price in a Directed Share Program.
You may be eligible to participate in the Directed Share Program if you meet certain eligibility requirements, including having been a Vonage customer from December 15, 2005 through February 1, 2006. You do not need to continue to be a Vonage customer in order to participate.
Vonage directs customers to a web site that spells out the terms and conditions of this offer (which are also found in a revised S-1 filed by Vonage this morning), among which are the requirements that a customer:
—signed up at least as early as 12/15/05
—is a U.S. citizen
—has a valid social security number
—is a person as opposed to a corporation or other commercial entity
—is eligible to open a limited purpose brokerage account at specified financial institutions including Smith Barney, Deutsche Bank Alex.Brown, a division of Deutsche Bank Securities Inc., or UBS Financial Services Inc.
Customers are required to open up their brokerage accounts by May 19, 2006 and are required to purchase at least 100 shares and are eligible to purchase no more than 5,000 shares. A customer is required to make a conditional bid on the share price — if the pre-IPO price (currently $16 to $18 per share) covers that bid, the customer’s bid will be accepted.
If valid bids are received for more shares than have been reserved for allocation in the “Vonage Customer Directed Share Program,” Vonage will reduce the customer’s shared by a formula spelled out in the offer.
The site for enrolling in the Vonage customer share program goes to great lengths to 1. ensure the customer has read the prospectus and 2. in the event the customer didn’t read the prospectus, identify the risks of investment anyway.
That’s about as far as I got given that I’m not going to open up a brokerage account.
My question: what is this? Is anyone aware of any other company offering its mass market customers pre-IPO shares? Is this truly a reward for customers or is it a way to ensure that Vonage is fully subscribed before hitting the public markets?
Cynthia Brumfield at 9:02 AM|Comments(0)
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