Company XYZ has 10 million shares of common stock outstanding. It issued 3 million shares of Preferred Stock at a price of $6.00 per share in its latest round of financing (Series A). The recently issued 3 million shares of Preferred Stock are protected with a weighted-average anti-dilution provision. Now the firm issues 6 million shares of Series B Preferred stock at a price of $3 per share. a) What will be the ownership structure of the firm after the conclusion of the Series B round (on a fully-diluted as-converted basis)? b) Who factually pays for Series A’s anti-dilution provision?
Company XYZ has 10 million shares of common stock outstanding. It issued 3 million shares of Preferred Stock at a price of $6.00 per share in its latest round of financing (Series A). The recently issued 3 million shares of Preferred Stock are protected with a weighted-average anti-dilution provision. Now the firm issues 6 million shares of Series B Preferred stock at a price of $3 per share. a) What will be the ownership structure of the firm after the conclusion of the Series B round (on a fully-diluted as-converted basis)? b) Who factually pays for Series A’s anti-dilution provision?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Company XYZ has 10 million shares of common stock outstanding. It issued 3 million shares of Preferred Stock at a price of $6.00 per share in its latest round of financing (Series A). The recently issued 3 million shares of Preferred Stock are protected with a weighted-average anti-dilution provision. Now the firm issues 6 million shares of Series B Preferred stock at a price of $3 per share.
a) What will be the ownership structure of the firm after the conclusion of the Series B round (on a fully-diluted as-converted basis)?
b) Who factually pays for Series A’s anti-dilution provision?
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