Shares in lieu of repayment / default - how s it valued ?

[DSLiverpool]

I’m lending some cash to a shareholder / director and it’s an agreed repayment term and an agreed repayment amount.

If it’s not repaid the agreement gives me an option to convert to shares in the business.

Should it say “at current valuation on day of default”?

It’s a private company with 6 shareholders worth £18/21m ish

I’m happy with the risk just this investment I’m unsure of.

[DSLiverpool]

Ignore me - I’ve just realised I’ll insert “if not repaid by x the recipient will sell an amount of shares to release funds.”

[LooneyTunes]

DSLiverpool said:

Ignore me - I ve just realised I ll insert if not repaid by x the recipient will sell an amount of shares to release funds.

If you do, make sure that you include relevant reps and warranties to the effect that the shareholders agreement doesn’t restrict share sales.

[DSLiverpool]

LooneyTunes said:

If you do, make sure that you include relevant reps and warranties to the effect that the shareholders agreement doesn t restrict share sales.

Cheers - I have checked that and they already had a board meeting to facilitate this,

I hope to tell this redacted story on here one day but it’s too soon and ongoing.

[macron]

If they're worth £20m why do they need cash?

Looking forward to the story!!

[spikeyhead]

macron said:

If they're worth £20m why do they need cash?

Looking forward to the story!!

A rapidly expanding company will almost always face cashflow issues.

[DSLiverpool]

Well the money has been paid, the Halifax demanded I visit a branch and I was grilled in case a nasty person was coercing me.

I’ll tell this story one day but not in the immediate future.