You work in the Legal department of Bank A$,$ which is a holder of $100,000$ shares of the common stock of XYZ corp., a publicly traded US company. Bank A has lent out all of its shares to Bank B pursuant to a $2000$ Master Securities Loan Agreement $($without any additional Schedule B$).$ There are $1,000,000$ shares of XYZ corp. issued and outstanding.

It is May $1,2018$ and ABC corp. has announced that it intends to purchase XYZ and has made a tender offer for all shares of XYZ at $$100$ a share. XYZ shares last traded on April $30,2018$ at $$60$ a share. ABC$$s offer is conditioned upon receipt of $90\%$ of all outstanding shares by July $1,2018.$

Senior management of Bank A wants to take advantage of ABC$$s tender offer. They have been informed that the bank$$s shares are out on loan. They have asked you to send them an email explaining whether this means that they are now unable to take advantage of the tender offer and, if not, what they can do to tender their shares.

Answer:

Your senior management has been informed by Bank B that it is unable to return the shares it borrowed from Bank A because it lent them to Bank C and has been unable to get them back. Senior management has asked you to send them an email explaining what their options are at this point.

Answer:

Bank A has $10$ other securities loan transactions outstanding with Bank B$.$ Senior management is reviewing the overall relationship with Bank B and would like to know if they can terminate the loan on XYZ but leave the other transactions in place. They have asked you to send them an email on this point.

Answer:

Bank B has not been able to return your shares and the deadline for ABC$$s offer is fast approaching. In the event that ABC cannot close its tender offer, they expect XYZ$$s share price to return to $$60.$ They want to know via email whether they can, on the basis of the contract only, hold Bank B responsible for their loss of $$40$ per share.

Answer: