• Share
  • Email
  • Embed
  • Like
  • Save
  • Private Content
Harlem Biospace Seminar: Raising Money by Convertible Debt
 

Harlem Biospace Seminar: Raising Money by Convertible Debt

on

  • 180 views

Explores:

Explores:
- What is convertible debt?
- When should I use convertible debt instead of equity?
- What are the market terms for convertible debt?

Statistics

Views

Total Views
180
Views on SlideShare
179
Embed Views
1

Actions

Likes
0
Downloads
0
Comments
0

1 Embed 1

http://www.slideee.com 1

Accessibility

Upload Details

Uploaded via as Adobe PDF

Usage Rights

© All Rights Reserved

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Processing…
Post Comment
Edit your comment

    Harlem Biospace Seminar: Raising Money by Convertible Debt Harlem Biospace Seminar: Raising Money by Convertible Debt Presentation Transcript

    • Harlem Biospace Seminar: Raising Money by Convertible Debt Jen Berrent February 10, 2014 Attorney Advertising
    • Raising Money by Convertible Debt Topics  What is convertible debt?  When should I use convertible debt instead of equity?  What are the market terms for convertible debt? © 2014 Wilmer Cutler Pickering Hale and Dorr LLP WilmerHale 2
    • What is convertible debt? Convertible debt is a loan with equity features  Debt terms: principal, maturity, interest  Debt claim priority against assets  Principal (and sometimes accrued interest) may be converted into equity  Conversion may be at the option of the holder or the company, and may be subject to certain contingencies  Often convertible (sometimes at a discount) into securities issued in first equity round raised from outside investors © 2014 Wilmer Cutler Pickering Hale and Dorr LLP WilmerHale 3
    • When should I use convertible debt instead of equity?  Pros – Few variables to negotiate (so quick with low transaction costs) – No current valuation need be set – Maintains control by the founders  Cons – Not a “priced” round – Converts at a discount in the next round – Often includes a “cap” on conversion price into next round © 2014 Wilmer Cutler Pickering Hale and Dorr LLP WilmerHale 4
    • What are the market terms for convertible debt? Loan Terms  Aggregate Amount  Proposed Minimum Investment  Initial Closing  Interest Rate  Due Date of Notes © 2014 Wilmer Cutler Pickering Hale and Dorr LLP WilmerHale 5
    • What are the market terms for convertible debt? Conversion upon a Qualified Financing  Definition of a Qualified Financing  Discount to Purchase Price  Cap on Purchase Price © 2014 Wilmer Cutler Pickering Hale and Dorr LLP WilmerHale 6
    • What are the market terms for convertible debt? Conversion upon a Sale of the Company  Definition of a Sale  Payment to Noteholders: – Based on conversion into Common Stock – Fixed return (multiple of principal) © 2014 Wilmer Cutler Pickering Hale and Dorr LLP WilmerHale 7
    • What are the market terms for convertible debt? Conversion at Maturity  At the Election of Company and/or Election of Noteholder(s)  Conversion Rate – Fixed at initial issuance of notes – Calculated at maturity (based on fully-diluted equity outstanding) Wilmer Cutler Pickering Hale and Dorr LLP is a Delaware limited liability partnership. WilmerHale principal law offices: 60 State Street, Boston, Massachusetts 02109, +1 617 526 6000; 1875 Pennsylvania Avenue, NW, Washington, DC 20006, +1 202 663 6000. Our United Kingdom offices are operated under a separate Delaware limited liability partnership of solicitors and registered foreign lawyers authorized and regulated by the Solicitors Regulation Authority (SRA No. 287488). Our professional rules can be found at www.sra.org.uk/solicitors/codeof-conduct.page. A list of partners and their professional qualifications is available for inspection at our UK offices. In Beijing, we are registered to operate as a Foreign Law Firm Representative Office. This material is for general informational purposes only and does not represent our advice as to any particular set of facts; nor does it represent any undertaking to keep recipients advised of all legal developments. Prior results do not guarantee a similar outcome. © 2014 Wilmer Cutler Pickering Hale and Dorr LLP © 2014 Wilmer Cutler Pickering Hale and Dorr LLP WilmerHale 8