Collateralized Loan Product

 

CASE STUDY: JP Loan (LOAN:JP)

 

COMPANY BACKGROUND

 

JP Loan conducts real estate revitalization business in Japan. The company was founded in 1988 and is based in Tokyo, Japan.

 

ADVANTAGES

 

See below.

 

Position
Company
Term
2 years
Facility Amount
50000000

About High West Capital Partners

Since its founding in 2016, High West Capital Partners is recognized as a global leader in structured finance with experience in execution of collateral versus stock loan transactions. High West Capital Partners is an expert at customizing solutions that help shareholders manage the risks inherent in concentrated equity positions.

 

Executive Summary

The objective of High West Capital Partners’ collateralized loan product (CLP) is to protect concentrated shareholders from potential volatility while unlocking flexible liquidity. High West Capital Partners achieves this by working with its clients to structure a bespoke collateralized loan product that’s tailored to meet their client’s objectives. High West Capital Partners is able to help their clients manage downside price risk while retaining unlimited stock price appreciation. High West Capital Partners is also committed to helping their clients achieve efficient funding, diversification, and yield enhancement.

 

High West Capital Partners Collateralized Loan Product (CLP)

 

Structure

A shareholder pledges their concentrated equity position in return for a bespoke collateralized loan from High West Capital Partners.

 

Advantages

  • High West Capital Partners’ CLPs help their clients manage downside price risk and retain unlimited price appreciation
  • High West Capital Partners’ CLPs have no upfront out-of-pocket expenses
  • High West Capital Partners’ CLPs offer flexibility to customize a structure that meets the shareholder’s objectives
  • High West Capital Partners’ CLPs provide a credit line which provides a secure, low-cost source of funds for the term of the loan
  • High West Capital Partners’ CLPs are non-recourse meaning that no personal or corporate guarantees are required to obtain financing
  • High West Capital Partners’ CLPs offer quick funding as opposed to traditional financing from banks or capital markets
  • High West Capital Partners’ CLPs are cov-lite meaning the shareholder maintains maximum flexibility
  • High West Capital Partners’ CLPs are non-purpose meaning the shareholder has unrestricted use of proceeds
  • High West Capital Partners’ CLP is interest only with principal due at maturity

 

High West Capital Partners CLP versus other alternatives

 

Bank Loans

Bank loans are given on a full-recourse basis meaning that the shareholder has personal or corporate liability beyond the collateral. Bank loans are also more difficult to obtain with less flexibility due to the banks being subject to Basel III requirements. Lastly, the terms at banks offer are significantly inferior to High West Capital Partners’ terms. Banks offer extremely low loan-to-value ratios while charging high interest rates.

 

Public Offerings

Public offerings are only available for public companies and are not available for private individuals or corporations.

 

Margin Loans

Margin loans are purpose loans collateralized by securities. The loan proceeds can only be used to purchase additional marginable securities in the client’s account. The loans are not non-purpose loans unlike High West Capital Partners’ CLP.

 

Private Lenders

Other private lenders have neither the experience nor the long term pool of liquidity that High West Capital Partners has. With less assets under management than High West Capital Partners, other private lenders do not have the flexibility to structure financing solutions like High West Capital Partners. Furthermore, many private lenders do not operate in favorable banking jurisdictions unlike High West Capital Partners. Also, most private lenders do not establish long term partnerships with their clients because they do not deliver sound solutions.

 

Asset Sales

The shareholder does not retain upside appreciation in an asset sale. Furthermore, the shareholder can create a negative public image if he or she maintains a senior executive position at the public company. Minority shareholders wish to see management teams hold concentrated equity positions in their companies in order to align their interests with all stakeholders. Lastly, asset sales can trigger tax events that may be burdensome for the shareholder.

 

Conclusion

High West Capital Partners offers its clients with the best collateralized loan product in the world. High West Capital Partners focuses on working with its clients to structure a bespoke CLP that offers numerous advantages over both traditional and alternative options. High West Capital Partners will continue to innovate and consistently deliver the best collateral vs stock loans globally.

 

Reference Links

https://welcome.gsselect.com/content/gsSelect/us/en/how-it-works.html
https://www.ipb.citibank.co.uk/citigold/wealth-management-products/securedlending/index.htm
https://www.ml.com/solutions/structured-lending.html
https://highwestcapitalpartners.com

 

Loan Transaction

Structure: Loan facility with drawdown
Company: JP Loan
Facility Amount: Up to USD 50MM
Position: Company
Term: Revolving

 

The company has no upfront out-of-pocket expenses and can elect stock settlement and therefore have no obligation to deliver cash at maturity. Availability of credit line which provides a secure, low-cost source of funds for the term of the transaction – Company may borrow up to the present value of the floor with no restrictions on the use of proceeds. Structure can be deployed by company insiders.

Instant Quote

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High West Capital Partners, LLC may only offer certain information to persons who are “Accredited Investors” and/or “Qualified Clients” as those terms are defined under applicable Federal Securities Laws. In order to be an “Accredited Investor” and/or a “Qualified Client”, you must meet the criteria identified in ONE OR MORE of the following categories/paragraphs numbered 1-20 below.

High West Capital Partners, LLC cannot provide you with any information regarding its Loan Programs or Investment Products unless you meet one or more of the following criteria. Furthermore, Foreign nationals who may be exempt from qualifying as a U.S. Accredited Investor are still required to meet the established criteria, in accordance with High West Capital Partners, LLC’s internal lending policies. High West Capital Partners, LLC will not provide information or lend to any individual and/or entity that does not meet one or more of the following criteria:

1) Individual with Net Worth in excess of $1.0 million. A natural person (not an entity) whose net worth, or joint net worth with his or her spouse, at the time of purchase exceeds $1,000,000 USD. (In calculating net worth, you may include your equity in personal property and real estate, including your principal residence, cash, short-term investments, stock and securities. Your inclusion of equity in personal property and real estate should be based on the fair market value of such property less debt secured by such property.)

2) Individual with $200,000 individual Annual Income. A natural person (not an entity) who had individual income of more than $200,000 in each of the preceding two calendar years, and has a reasonable expectation of reaching the same income level in the current year.

3) Individual with $300,000 Joint Annual Income. A natural person (not an entity) who had joint income with his or her spouse in excess of $300,000 in each of the preceding two calendar years, and has a reasonable expectation of reaching the same income level in the current year.

4) Corporations or Partnerships. A corporation, partnership, or similar entity that has in excess of $5 million of assets and was not formed for the specific purpose of acquiring an interest in the Corporation or Partnership.

5) Revocable Trust. A trust that is revocable by its grantors and each of whose grantors is an Accredited Investor as defined in one or more of the other categories/paragraphs numbered herein.

6) Irrevocable Trust. A trust (other than an ERISA plan) that (a)is not revocable by its grantors, (b) has in excess of $5 million of assets, (c) was not formed for the specific purpose of acquiring an interest, and (d) is directed by a person who has such knowledge and experience in financial and business matters that such person is capable of evaluating the merits and risks of an investment in the Trust.

7) IRA or Similar Benefit Plan. An IRA, Keogh or similar benefit plan that covers only a single natural person who is an Accredited Investor, as defined in one or more of the other categories/paragraphs numbered herein.

8) Participant-Directed Employee Benefit Plan Account. A participant-directed employee benefit plan investing at the direction of, and for the account of, a participant who is an Accredited Investor, as that term is defined in one or more of the other categories/paragraphs numbered herein.

9) Other ERISA Plan. An employee benefit plan within the meaning of Title I of the ERISA Act other than a participant-directed plan with total assets in excess of $5 million or for which investment decisions (including the decision to purchase an interest) are made by a bank, registered investment adviser, savings and loan association, or insurance company.

10) Government Benefit Plan. A plan established and maintained by a state, municipality, or any agency of a state or municipality, for the benefit of its employees, with total assets in excess of $5 million.

11) Non-Profit Entity. An organization described in Section 501(c)(3) of the Internal Revenue Code, as amended, with total assets in excess of $5 million (including endowment, annuity and life income funds), as shown by the organization’s most recent audited financial statements.

12) A bank, as defined in Section 3(a)(2) of the Securities Act (whether acting for its own account or in a fiduciary capacity).

13) A savings and loan association or similar institution, as defined in Section 3(a)(5)(A) of the Securities Act (whether acting for its own account or in a fiduciary capacity).

14) A broker-dealer registered under the Exchange Act.

15) An insurance company, as defined in Section 2(13) of the Securities Act.

16) A “business development company,” as defined in Section 2(a)(48) of the Investment Company Act.

17) A small business investment company licensed under Section 301 (c) or (d) of the Small Business Investment Act of 1958.

18) A “private business development company” as defined in Section 202(a)(22) of the Advisers Act.

19) Executive Officer or Director. A natural person who is an executive officer, director or general partner of the Partnership or the General Partner, and is an Accredited Investor as that term is defined in one or more of the categories/paragraphs numbered herein.

20) Entity Owned Entirely By Accredited Investors. A corporation, partnership, private investment company or similar entity each of whose equity owners is a natural person who is an Accredited Investor, as that term is defined in one or more of the categories/paragraphs numbered herein.

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168 Robinson Road
#12-01 Capital Tower
Singapore 068912

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