Potential Alternatives to Conventional PIPE (Private Investment in Public Equity) Financing

What's the HedgeLender Solution?

It is the opportunity to gain potentially faster funding, flexibility, and greater shareholder commitment through use of a HedgeLoan® stock or securities loan structure.

Your publicly trading company needs to raise $1,000,000 in capital but can’t do asset-based lending and can't afford to wait for a PIPE to be completed.

One solution: Use a Premier HedgeLoan stock-secured loan or Premier institutional securities-based financing solution to undertake off-balance sheet financing with shareholders friendly to the issuer and gain flexibility and greater shareholder loyalty in the process. Shares that collateralize the Premier loan remain in the client's name, account, and title throughout the loan term.

How It's Done:

• John Shareholder, who owns a large stock position chooses to pledge $1.25MM for a new HedgeLoan @ 80% LTV. (Up to 85% for stocks is possible). He complies with any/all reporting requirements, as applicable.
  
  
• Shareholder could then lend $1MM to your company in exchange for a $1MM repayment note at (for example) 9% interest, with warrants or options perhaps as an equity incentive.

Behind the Numbers:

Borrower benefits:

Can be structured so that borrower also receives warrants, which could have added value in the future should the stock perform well. (terms negotiated with the issuer). No debt service - since the borrower’s note will run concurrent with the stock loan, the debt service would in theory be covered by interest paid to borrower on note, particularly if the loan interest was sufficiently competitive (payment terms and dates can be structured to fall just prior to due date on the Premier loan; Premier interest rates are tied to monthly LIBOR +4, or approximately 4.35% as of third/early fourth quarter of 2009.)

Issuer benefits:

Quick funding – Within a few weeks may be possible vs. the many months common to normal PIPE or secondary offerings. Many registration and legal costs associated with PIPE or secondary offerings are not likely to be required with a simple Premier securities finance solution (as with any such financing structure, always consult with a licensed legal professional before proceeding). Shares can go (via warrants) to those who have the best interests of the company at heart with this solution, as opposed to unknown parties whose interests might not coincide with those of the company.*

Please contact us here for your questions or to get a quick Premier HedgeLoan® or Premier securities loan quote.