Mike Legregin of AST discusses why centralized and integrated services are key in handling the company’s Corporate Actions and M&A services.
CCBJ: AST has a robust offering of Corporate Actions and M&A services. Tell our readers more about these solutions.
Mike Legregin: AST provides all-inclusive services for M&A and corporate actions. We handle about 400 M&A transactions each year, managing the processing of voluntary, mandatory and escrow transactions. Last year, we paid out in excess of $95 billion in consideration proceeds.
On the operations side, a document tracking system helps us monitor items from our initial receipt in the mail unit to our processing unit to ensure they are processed in a timely manner. Our system has the capability to process all types of transactions.
From a processing standpoint, every item that comes in is tracked, and that helps with monitoring and turnaround times. Every item presented and exchanged is 100 percent quality controlled; we are very diligent in what we do.
What differentiates AST in this space?
Several things come to mind. First, we have an extremely knowledgeable and experienced staff. Our employees have been in the industry for a long time. Mike Ashenfarb on the client relationship team spent many years at the Depository Trust Company (DTC). That’s important because about 95 percent of outstanding positions on M&A transactions we handle involve working closely with the DTC. So, having a former DTC employee here helps us gain insight into how they might handle certain issues.
Second, our relationship support team is on site in Brooklyn. At AST, clients, or their counsel, have a dedicated relationship manager who works with them directly to execute agreements and makes sure all necessary documents are prepped and set up in our system so they are ready to be sent to shareholders. From there, we can print, imprint and mail everything from one facility. Our call center and our operational staff are also on site. Being able to walk from floor to floor to get critical client questions resolved is a big advantage. Having worked at many of our competitors, I can tell you, that is different and makes us more efficient for clients and their shareholders.
Another way this all comes together is in our white glove service. Approximately 10 days after the effective day of a merger, we offer an “on-site window” for three to five days when shareholders can bring their certificate and letter of transmittal to the target company’s main office, and typically three senior managers from AST will be there to assist them with their presentation. The shareholder will sit with an AST manager, who reviews their presentation to ensure it’s in good order and provides them with a window ticket receipt for their records. The AST team then overnights the presentation to our operations center in Brooklyn, where processing is expedited and merger considerations are mailed within several days of receipt.
Shareholder feedback on this service has been overwhelmingly positive. They love the speed of the process and ease of meeting with a knowledgeable professional who provides them with a receipt, and they don’t have to be concerned with overnight mail or postal insurance. The response from both the target companies and the purchasers has also been extremely positive and appreciative.
The idea of a cross-functional service is echoed in the broader integrated structure of AST. Which other businesses within AST do you collaborate with?
Corporate Actions recently partnered with AST Fund Solutions. Fund Solutions was working with an investment management company that wanted shareholder approval to convert an open-end fund to a closed-end fund, based on market and performance analyses that showed the conversion should result in better long-term realization of the fund’s objectives, creating benefits for both the company and its investors.
The company needed shareholder approval for the conversion but didn’t have an immediate rationale. It offered to pay a consent fee to any shareholder who continued to hold shares through the conversion. The fee would be paid by the advisor, not the fund, and posted to investors’ accounts following the successful conversion.
Fund Solutions’ campaign strategy was designed to get the necessary vote quickly in order to avoid any chance the meeting would be postponed. From the initial mailing to the meeting date, the proxy campaign took only three weeks. The time from expected shareholder approval on the meeting date to the completed conversion was also very short.
Again, planning and coordination were critical to managing this process successfully. While AST Fund Solutions managed the proxy campaign, our Corporate Actions team worked on the conversion. This integrated solution across business lines really demonstrated the advantage of handling the entire operation under one roof.
And over the last several years, AST has been very acquisitive and has built a truly integrated offering for companies at all stages of their lifecycle. That’s certainly reflected in how we work with other AST business lines.
For instance, all voluntary transactions require an information agent who needs to be able to take calls and provide material distributions to beneficial street holders. For this, we have a partner in D.F. King, an AST company.
D.F. King has been around for more than 40 years and part of AST since 2014, and its name is second to none in the proxy solicitation space. We work hand-in-hand with them on all voluntary transactions, and they can support our Transfer Agent and Corporate Actions clients with their annual meeting services. Ultimately, it’s easier for the client to utilize one company instead of working with numerous service providers.
How has working with some of AST’s other business lines enabled you to help clients in unique situations?
Handling unique situations requires the ability to work with a host of different entities. These include corporate management, the company’s internal and outside counsel, the Street, DTC, tax entities and others, and we are well positioned to assist.
For example, we recently completed three fund conversions for a large closed-end fund client, and immediately upon conversion, we exchanged all three funds at different rates into a new fund issue. The conversion was completed over a weekend, and the exchange was processed that Monday. AST’s Conversion, IT and Corporate Actions teams worked together to consolidate all accounts across three databases into one new account. We also worked with the brokers to help consolidate their positions, make one DWAC (deposit/withdrawal at custodian) for their total position and provide them with a list of all of their custodian positions. Our process helped them avoid potentially hundreds of DWACs after the exchange.
Ultimately, the success of the deal rested on the proper management, coordination and communication between all parties.
Published July 5, 2019.
