This excerpt taken from the NDAQ 8-K filed Dec 11, 2006.
Future acquisitions, partnerships and joint ventures may require, and the proposed LSE acquisition will require, significant resources and/or result in significant unanticipated losses, costs or liabilities.
Over the past three years, acquisitions including the acquisitions of INET and Nasdaq Execution Services, LLC (formerly Brut, LLC) and the proposed LSE acquisition, have been a significant factor in our growth. Although we cannot predict our rate of growth as the result of acquisitions, we believe that additional acquisitions or entering into partnership and joint ventures are important to our growth strategy. Many of the other potential purchasers of assets in our industry have greater financial resources than we have. Therefore, we cannot be sure that we will be able to complete future acquisitions on terms favorable to us.
We may finance future acquisitions by issuing additional equity and/or debt, including the proposed LSE acquisition which we intend to finance with debt and equity. In connection with the proposed LSE acquisition, we have entered into
finance arrangements pursuant to which we will borrow up to $5.1 billion (a portion of which would be used to repay our existing senior secured indebtedness in full) and issue up to $775.0 million of preferred stock. The issuance of additional equity in connection with any transaction could be substantially dilutive to existing stockholders. The issuance of additional debt could increase our leverage substantially and, in the case of the proposed LSE acquisition, will increase our leverage substantially. In addition, announcement or implementation of future transactions by us or others could have a material effect on the price of our stock. We could face financial risks associated with incurring additional debt, particularly if the debt resulted in significant incremental leverage. Additional debt may reduce our liquidity, curtail our access to financing markets, impact our standing with the credit agencies and increase the cash flow required for debt service. Any incremental debt incurred to finance an acquisition, including the proposed LSE acquisition which we intend to finance with debt and equity, could also place significant constraints on the operation of our business. The credit facility we have entered into in connection with the proposed LSE acquisition imposes certain restrictions on future acquisitions. We may not be able to meet those restrictions.
These equity, debt and managerial commitments may impair the operation of our businesses. Furthermore, any future acquisitions of businesses or facilities could entail a number of additional risks, including: