Case Study: EUR20m Stock Loan For HNW Company Director In France

EUR20m Stock Loan For HNW Company Director In France

EUR20m Stock Loan For HNW Company Director In France

Background:

  • Client Profile: High-net-worth (HNW) individual based in France.
  • Financial Position: Significant shareholding in a French listed oil manufacturing company with a market capitalization exceeding €500 million.
  • Clients Position: Client held EUR15m of shares through a long term share purchase scheme and requested a 3 year stock loan.
  • Financing Requirement: Approximately €5 million.
  • Loan Terms: Non-recourse, single-stock loan at a fixed 4.25% interest per annum with a three-year term.

Client’s Objective: The HNW client, a stock holder in the French listed oil manufacturing company, aimed to leverage their concentrated position in the French-listed stock for additional personal liquidity. The client’s priority was to maintain ownership of the stock, along with retaining dividends and voting rights.

Financing Solution: To meet the client’s unique requirements, a non recourse stock loan was structured against their shareholding. This financial solution allowed the client to secure liquidity without exposing personal assets to risk. The loan, priced at a fixed 4.25% interest per annum, provided a three-year term with the option to close early after 2 years.

Unexpected Challenge: The client faced an unexpected challenge when they required the financing earlier than initially anticipated.

Outcome: In response to this urgent need, the lender demonstrated remarkable efficiency by paying out the loan within an impressive two-week timeframe, aligning with the client’s accelerated timeline. The client retained beneficial ownership of their shares, maintaining entitlement to future dividends and potential market appreciation.

Benefits of Non-Recourse Loan: The non-recourse loan structure provided several key advantages:

  1. Limited Personal Risk: The borrower faced no personal obligation or risk to personal assets in the event of default.
  2. Economic Ownership Retained: The client retained complete beneficial economic ownership of their shares, ensuring entitlement to future dividends and potential market appreciation.
  3. Strategic Flexibility: The client had the flexibility to walk away from the loan without additional financial obligation, safeguarding their overall financial position.

Conclusion: This case study underscores the strategic use of non-recourse, single-stock loans for high-net-worth individuals, especially insiders, providing access to liquidity while safeguarding concentrated equity positions. The ability to navigate unexpected market downturns without sacrificing long-term ownership positions exemplifies the resilience and strategic advantages of well-structured financial solutions, particularly in the face of unique challenges within the French market.

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    Platinum Global Bridging Finance is a distinguished high-net-worth finance broker. We specialize in providing tailored financial solutions, including Property Bridging Finance, Development Finance, Single Stock Loans, Margin Stock Loan and Commercial Property Finance tailored to meet the diverse needs of our clientele seeking robust financial lending solutions.