January 22, 2018 / 1:58 PM / 7 months ago

IPO aspirants prepare for SEC shutdown with early filings

NEW YORK (IFR) - Several companies seeking to go public this week moved on last Friday to eliminate the risk of a U.S. government shutdown and its impact on the Securities and Exchange Commission’s operations.

The seal of the U.S. Securities and Exchange Commission hangs on the wall at SEC headquarters in Washington, DC, U.S., June 24, 2011. REUTERS/Jonathan Ernst/Files

Apollo-backed electronic gaming machine maker PlayAGS is among the IPO-bound companies that were understood to have filed on Friday to obtain early “effectiveness,” or SEC clearance of their IPO paperwork as a contingency against the first U.S. government shutdown in four years.

The SEC said on Friday that in the event of a government shutdown, it would remain open for a “limited amount of days, fully staffed and focused on the agency’s mission.”

The shutdown went into effect early Saturday after U.S. lawmakers failed to agree on a new spending bill. A vote is expected again in the U.S. Senate later on Monday for a short-term spending plan.

It is unclear how long the SEC operations can stay open for business, though for companies with IPOs already on the road, the uncertainty comes at a awkward time while they are out raising funds from investors.

PlayAGS is scheduled to price an up to US$184m IPO on Thursday and list on the NYSE on Friday. It is one of eight scheduled pricings in what is shaping up to be the busiest week of the year to date for new issues and the busiest January for IPO volumes in recent memory.

A banker close to the deal said PlayAGS filed several forms with the SEC that enabled its registration to become effective and move ahead with its debut regardless of the SEC’s status.

The company could withdraw the request if the SEC is unaffected.

Filing activity suggests others on the calendar this week, including Menlo Therapeutics, PagSeguro Digital and Corporación América Airports, did the same.

This gives these companies the flexibility to go ahead with their IPOs - or not - regardless of whether the government shutdown, though it may remain an issue for IPOs planned for the following weeks.

An extended shutdown may mean the SEC’s key prospectus processing divisions, including the Division of Corporation Finance, are unable to process filings, provide advice and conduct normal activities.

New or pending registration statements would not be processed regardless of their status, the SEC said Friday.

“In the event that the SEC does shut down, we will pursue the agency’s plan for operating during a shutdown. As that plan contemplates, we are currently making preparations for a potential shutdown with a focus on the market integrity and investor protection components of our mission,” the SEC said.

Law firm Cooley was among the securities law firms that advised clients on Friday to plan accordingly ahead of the shutdown.

Reporting By Anthony Hughes

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