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Title 3 . Commerce, Community, and Economic Development
Chapter 8 . Land Sales
Section 220. Debentures

3 AAC 08.220. Debentures

(a) Repealed 4/19/2000.

(b) The administrator will, in the administrator's discretion, determine that an offer or sale of debt securities, including debentures, notes, and bonds of an issuer, does not protect investors, is not in the public interest, and involves unreasonable participation by any promoters holding equity securities if

(1) the cash flow of the issuer for the last year before the public offering, or the average cash flow of the issuer over the last three years before the public offering, exclusive of non-recurring items and adjusted for the issuance of debt securities or the substantiated future cash flow capability of the issuer, is insufficient to cover the interest on the securities proposed to be offered to the public; or

(2) the ratio of debt to equity on the balance sheet of the issuer exceeds two to one unless the administrator finds that participation in the public interest and consistent with the protection of the investors in the debt security proposed to be offered.

(c) If the issuer makes a material acquisition after the latest year for which actual figures are stated in the prospectus, the issuer shall make the computation of earnings or cash flow in this section on a pro forma basis to include those acquisitions.

(d) The issuance of debentures by an issuer in the promotional or developmental stage will not be permitted unless justified by the applicant as protective of investors or in the public interest.

(e) This section does not apply to the issuance of

(1) debt securities by a non-profit issuer;

(2) industrial development revenue bonds;

(3) securities under a voluntary or involuntary corporate reorganization; or

(4) securities by an issuer whom a federal or state governmental authority regulates with respect to the issuer's financial structure or the issuance of those securities.

History: Eff. 2/20/72, Register 41; am 4/19/2000, Register 154

Authority: AS 45.55.120

AS 45.55.950


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Last modified 7/05/2006