Facebook Cancels Their Secondary Offering and Board Members Vow Not To Sell

Posted Sep 5, 2012

Facebook does not want to make the value of their stock any lower so they have cancelled their secondary offering.  They will instead pay for taxes on its restricted stock units with cash as evidenced by an 8-K that they filed with the SEC today.  Facebook CEO Mark Zuckerberg has informed that the SEC he does not have any plans to sell his stock in the next year.  Facebook board members Marc Andreessen and Don Graham said that they will sell some of their stock to cover taxes, but beyond that they do not have any present “intention to sell any shares.”

Facebook allowed employees to sell up to 234 million shares two weeks sooner than the original November 14th lockup expiration date when the other 777 million go free.  The company’s recent announcement said that Facebook will get the lockup over with sooner and will avoid a secondary sale or big shareholder dump from hurting their share price.  The company wants to finally get back to business.

Facebook’s original S-1 gave allowed the board to sell up to 122 million shares to the public market in a secondary offering to pay for taxes that are involved in settling the distribution of pre-2011 RSUs.  Later Facebook planned to sell 101 million shares to cover the taxes, but because the stock price is extremely volatile — the board has decided to scrap the secondary offering.  They plan to use $10 billion that they raised from the IPO to pay the taxes in cash.

Zuckerberg ensures that he will not sell any of his remaining “444 million shares of Class B common stock as well as 60 million shares of Class B common stock issuable upon the exercise of an option.  He will need to file with the SEC well in advance if he wanted to release any of his stake.