Overview of Convertible Facility
Structure
- ➤ Provides ongoing access to capital and a channel to periodically and selectively raise equity.
- ➤ Unlike traditional equity lines /SEDA structures, Broad Winds is investing capital up front.
- ➤ Stock is not sold in order to fund the transaction.
Issuer Friendly Terms
- ➤ Funding available regardless of market conditions.
- ➤ Quick to market – funding occurs within days of submission of executed agreement.
- ➤ Shares are issued at Investor´s option, interests are aligned with the Company.
- ➤ Convertible Facility should be used to further enhance credit and borrowing capacity.
- ➤ Provides investors and market with comfort that the company has a long-term partner to fund growth in addition to commercial bank financings.
Flexibility
- ➤ Company receives capital up front and can assess from there.
- ➤ No covenants or restrictions to prevent the company from seeking outside financings.
- ➤ Provides access to equity capital without complications of traditional offerings.
Securing long term financing at attractive levels
- Commitment Amount
- ➤ Typically 33% of Market cap at time of agreement (fixed amount) over 2-3 year period.
- ➤ Cash up front and mutually agreed upon additional tranches.
- Up-front Advances
- ➤ Designated as a function of anticipated use of proceeds and daily market liquidity.
- ➤ Typically priced off historical market prices.
- Notes
- ➤ If larger amount is required due to unforeseen short term capital requirements, Issuers may request larger advance from the Convertible Facility subject to trading parameters.
- ➤ Company management has option to redeem.
- ➤ Benefit of stock price appreciation over the repayment period is retained by the company and aligns General Pacific Group interests with those of the Company.
- Restriction on Resale
- ➤ The Investor may resell a portion or all of the Shares from the Convertible Facility.
- No Short-Selling
- ➤ The Investor is prevented from selling or short-selling any of the Company´s securities except selling Shares which are due to be delivered to the Investor pursuant to a Conversion Notice which has been issued by the Investor or from any share lending facility that the Company may arrange.
Convertible Facility – Process & Timeline
Anticipated Process Timeline
Week 1:
➤ Investor and company sign the Convertible term sheet.
➤ Investor´s counsel begins drafting of the agreement.
Week 2:
➤ Investor conducts due diligence (financial, legal and operational).
➤ Investor´s counsel sends legal draft to the company and its counsel.
Week 3 & 4:
➤ The company and its counsel render comments on the agreement.
➤ Address any additional due diligence points and Investor completes due diligence.
➤ Final draft of the agreement circulated.
Week 5:
➤ Closing.
*(Timing can be decreased depending on certain factors)
- Shareholder approval
- ➤ Grant of issuance on non-pre-emptive basis.
- ➤ Standard board authority required in order to issue new equity.
- Prospectus (if applicable)
- ➤ Not necessary in order to enter into convertible facility.
- ➤ Free trading, full-registered shares must be available at the time of initial funding.
