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I. Asset Investment One-Off Profit Payment
This is a kind of transaction with use the investment of bankable assets to fund project/s; the assets have to be acceptable to a West European bank. The choice of assets may be somewhat more limited if they were Russian, however as they are only used for Financial.

                                                                                                     Capability for an
                                                                                                     investment transaction
                                                                                                     the restriction would
                                                                                                     not be as tight as, say,
                                                                                                     for use as a Loan
                                                                                                     Security. The amount
                                                                                                     of the financial
                                                                                                     capability for
                                                                                                     investment purposes
                                                                                                     will be determined by
                                                                                                     the Arranger’s
                                                                                                     Investment Bank and
                                                                                                     clearly depends on the
                                                                                                     quality of the asset. (For example one of the Indian Client had provided Arranger with a subsidiary company’s shares on an assignment basis valued at Euro €750 million for which Arranger’s investment bank provided the financial capability of Euro €250 million and Arranger were able to provide them with a loan/one-off profit payment of Euro €350 million. This payment was made 30 days after the start of the investment transaction.)

We cannot provide Client with a general guideline since assets vary so much in terms of quality, location and hence bankability and financial capability for investment purposes.
The level of Initial Transaction Costs contained in Arranger’s Transaction Agreements vary from between Euros €50,000 to Euros €250,000 according to the amount of work that the Arranger, its subsidiaries and associates have to undertake for the Transaction.

These Initial Transaction Costs are normally paid in two equal stages with the first payment made on signing the Transaction Agreement and the second payment normally made when the Investment Bank has approved the Client and the Transaction.

II. Self-Liquidating Collateralised Loan with Asset Investment

SAMPLE: Foundation - Client needs an Euro 55 million to acquire a shares with defined bankable value.

                  Self-Liquidating Collateralised Loan -  SAMPLE

The loan is structured to ensure that the Loan Requirement of Euros €55 million does not have to be repaid by the Client. This is achieved by increasing the Loan Principal to include the cost of purchasing a bank guarantee that will repay Euros €55 million after 2 years. The monthly cost of the bank guarantee and loan interest is paid from the Client’s monthly investment profits, thereby making the loan self-liquidating. Apart from the irrevocable assignment of the purchased shares to Arranger for loan security and investment purposes, the Borrower does not need to provide any additional security.

                                          Asset Investment - SAMPLE
Whilst the shares would have a purchase value of Euros €55 million, their value for investment purposes would normally be conservatively downgraded by the investment bank to give a Credit Line Value for Arranger’s investment purposes (of say Euros €33 million in the example enclosed) which would be used by Arranger to generate Investment Profits of 10% of the Credit Line Value per month for the Client. These monthly Investment Profits are used to repay the monthly loan costs (Loan Repayments) comprising the repayment of the bank guarantee cost and loan interest on the reducing loan principal balance. Please refer to the enclosed financial proposal where it can be seen that at the end of the Month 16 in this example the Loan Principal Balance has been reduced to Euros €55 million, which is the sum that will be repaid at the end of the Month 24 by the Lender’s encashment of the Bank Guarantee. It is not repaid by the Client.

                      Profits Payments to the Borrower - SAMPLE

After Month 16, monthly loan interest is paid from the Client’s investment profits until the end of month 24. However, as the Client is now receiving investment profits on a monthly basis the Client may wish to make a single payment covering the outstanding interest by negotiation with Arranger. In the example shown the total investment profits paid to the Client is Euros approximately €27 million, which is a positive cash flow contribution to ongoing business operations/development.


1. With the above transaction structure and conditional on the irrevocable assignment for 2 years of the purchased shares to Arranger for investment, the Client will obtain funding to acquire the target shareholding with no additional security.
2. The Client does not have to pay back any part of the loan or loan interest from other cash flow sources - it is self-liquidated from the profits earned by the Arranger’s investment of the purchased shares and the in-built bank guarantee.
3. The Transaction is structured such to ensure that there is a residual profit stream paid to the Client at the end of the Loan/Investment Term.

We look forward to receiving an Executive Summary so we can review the potential transaction and we need a “summary” at this stage together with documentation to check out that the Commercial Property is currently producing a profitable income (i.e. ’performing’)

The agreement structure for this type of Transaction will be:

#  a Collateralized Loan Transaction Agreement for the loan to purchase
       the target company/property,

# a Secured Asset Investment Agreement for the investment of the
      unencumbered property assets assigned to Arranger to generate
      investment profits, and

# a Heads of Agreement that ties the above Agreements together and

Arranger to use the Investment Profits to liquidate the Collateralized Loan.
The reason for the separate agreements (to be signed concurrently) is that different banks and Arranger’s companies are normally involved for each stage of the overall Transaction.
However, no documentation will be prepared until the Arranger’s Investment Committee has approved in-principle this overall new transaction.

                                       Looking forward
                                 to cooperate with you!
Będzie nam bardzo miło!
Piotr Drożniakiewicz © 2008-2011
Wanted: Offered:
Self-Liquidating Loan&
Shares Term Investment
A foreign partner
for his representation,assistance, consulting, agency, etc.
in Poland and Belarus

Always cheap, reliably and on time!