Financing Start-ups through a Bond Issue
Issuing bonds with a prospectus is also a suitable option for entities that do not have sufficient collateral/security. In the case of bond issues with a prospectus without collateral, unsecured bond issues should provide a higher yield for investors than secured bond issues with a prospectus. This higher yield partially offsets the risk associated with an unsecured bond issue.
Bonds with Prospectus
EUR 5 m
A bond/debenture issue with a prospectus for EUR 5 m was subscribed through a securities dealer in three weeks.
PROJECT FINANCING FOR START-UP COMPANIES
An engineering start-up required capital of EUR 5 million, which it wanted to use to purchase technology/machinery and a production hall to expand its current production. Because it was making a loss, the company did not have sufficient credit for bank financing, despite its strong market potential. The company was looking for a solution that would allow it to finance the purchase of technology and property and thereby increase its production capacity.
SOLUTION
After the analysis, we proposed a project financing solution in the form of a bond/debenture issue with a prospectus, a maturity of 5 years and a fixed return for investors, which would be paid out regularly every year.
IMPLEMENTATION
After signing the contract in accordance with the aforementioned project financing strategy, we prepared a bond issue with a prospectus, which was subsequently approved by the central bank, including a request for notification of the bond programme in selected EU countries. The bond issue was subscribed through securities dealers.
A FEW WORDS IN CONCLUSION
Companies without a sufficient track record, companies making a loss but with high growth potential, companies without sufficient capital for their own development or for financing innovation are typical companies for which financing by issuing bonds with a prospectus is the ideal instrument.