Stock Loans

Empire Capital of America helps owners obtain cash from their equities—no sale necessary.

Overview:

With a stock loan, shareholders obtain liquidity from the asset while retaining contractual ownership and voting rights. They will also still enjoy the tax benefit and profit from the appreciation of their asset if the stock price rises; excluding principal and interest obligations.

Non-Recourse:

If the loan should default, there is no recourse beyond that of the collateral. Non-recourse financing has a flexible exit strategy where the shareholder can simply walk away from the loan with no further obligation should the share decrease in value. In this form of financing, the shareholder can either prepay the loan and reclaim the securities or walk away from their obligation entirely and forfeit only the collateral.

Recourse:

Recourse financing allows affiliates, holding large positions, access to the capital in private transactions without the obligation to sell it to the market. The shareholder can enjoy the benefits of their true net worth without upside loss or the limitations of quarterly registrations and limited liquidity.

General Parameters:

Favorable Terms:

Loan terms are 1 to 3 years with 12 month to 18 month prepayment lock outs. We also help offer an option to renew the loan for an additional year, at term of loan.

Agreeable Payment Structure:

Interest rates are generally between 3% and 5% fixed. The rate is based on certain variables and condition of the asset pledged, as well as the exchange it trades on. The payments for simple interests are due quarterly and the principal is due at term.

Loan-to-Value:

The position size and exchange where the asset is traded decides the LTVs which range from 55% to 75%.

No Margin Maintenance Requirements:

Margin Maintenance requirements are not included in the structure of this loan.

Investors Maintain Upside Potential:

The borrower retains the benefit of appreciation upon repayment of the total interest and principal due, provided there is no default or condition of the term.

Domestic and International Exchanges:

We help provide loans available on virtually all exchanges, both domestic and international. We also accept Bulletin Board and Pink Sheet securities as long as they qualify. The individual security and details of a particular market will determine the availability and terms of loans.

Options & Warrants:

Empire Capital of America helps provide solutions to shareholders the ability to convert their options and warrants into stock. These solutions do not require the shareholder to pay capital out-of-pocket nor sell to enjoy the cashless feature of the security.

Cashless Options:

The Action- There is no need to pay the option up-front when employee options vest. The only promise a shareholder has of converting would be contingent upon a sale at the current market price. All the option costs would be covered by the sale.

The Effect- Unfortunately the shareholder must sell today to receive the benefits of this portion of their compensation package. This leaves the employee without the benefit of price appreciation which employees are likely working for in the first place.

The Solution- The lender can cover the cash outlay for the conversion up front. This allows the shareholder to then pledge the converted securities for a loan. Once the loan is funded, the lender will subtract the cash outlay from the proceeds and the borrower can then benefit from the long term interest in the asset.

Traditional Options:

The Action- Shareholders are required to pay for the cost of the option out-of-pocket, when employee options vest. The only promise of paying themselves back is dependent upon a sale at current market price.

The Effect- This procedure also does not allow employees to benefit from the price appreciation that they are working for. The shareholder must sell today to replenish the cash laid out for the conversion, while trying to take advantage of this portion of their compensation package.

The Solution- The lender pays for the option conversion rather than the employee. The shareholder then pledges the converted stock for a loan. The lender will subtract the cash outlay from the proceeds once the loan is funded. After that, the borrower has the right to benefit from the long term interest in the asset.

 

© 2017 Empire Capital of America
Empire Capital of America. 112 W. 34th Street, 18th Floor Suite 1822 New York, NY 10120, USA Phone: 1-800-407-3090 E-Mail: info@empirecapitalofamerica.com