144a bond offering - get up to 100% LTV/LTC project Financing
144A bond is a privately issued debt security that is unregistered by the SEC, and traded only between qualified institutional investors who meet a net worth threshold.
It is a United States (U.S.) based bond offering which is considered to be a less costly alternative to initial public offering (IPO).
144A Bond regulations
144A bond offering falls under SEC rule 144A issued in 1990 to facilitate the resale of unregistered securities, in a more liquid and efficient institutional resale market.
Who can issue 144A Bonds?
Trading of 144a security is limited only to between 144a bond financing companies and qualified institutional investors under Rule 144A.
144a bond financing companies include a vast majority of institutions that can be regarded as accredited investors under the SEC securities laws.
Under the rule, the companies can engage in transactions the SEC would normally rate too risky for the general public.
Institutions can make trades even without proof of registration of the underlying issuer by the SEC.
Our services
We provide a link to 144a bond financing companies and underwriter groups, and assist our clients worldwide who want to achieve their business financing objectives.
We can help you secure up to 100% LTV/LTC project financing through 144a bond securities.
Minimum funding request of US$10 million and higher required for innovative financing and structuring.
Our values
The overall value that our financial team brings to 144a bond offering is creative thinking, underwriting expertise, and strategic relationships with potential 144a bond financing companies.
Since mid-2014, the Financial Industry Regulatory Authority (FINRA) with their Trade Reporting and Compliance Engine, started reporting transaction data for Rule 144A trades in the corporate bond funding program.
This enhanced transparency made access to more information about trade and transactions in the corporate debt market easily available.
All financial market participants including professional investors, now have a more efficient way of pricing and valuation of 144a bond offerings.
Most transactions involving securities of foreign companies are, however, not subject to SEC scrutiny.
This exposes U.S. based companies to the potential for fraudulent misrepresentations from foreign issuers.
However, the rule also reduces the risks to the industry by allowing companies to spread the risk from foreign issued 144a bonds in private placements.
This makes it easier for companies to issue private placement bonds by essentially facilitating a secondary market among corporations for those bonds.
It also makes regular initial public offerings (IPO) and other public issuance less attractive to institutional investors, and leaves individual investors with fewer investment options.
A 144A bond issue is for United States resident qualified corporations, and is but not always settled through DTCC in the U.S. and Euroclear or Clear stream in Europe.
Want to raise funds through 144A Bond offering?
If your company plans to issue a 144A bond offering to raise funding, you would need to write a disclosure document such as a private placement memorandum (PPM), under SEC rule 144A.
The terms of each bond issued will have the maturity date, interest rate, interest payment interval and other terms.
Since a PPM is technically a legal document, it is important that it protects you the entrepreneur by ensuring it satisfies the Security and Exchange Commission regulations.
It also helps you gain the trust of interested qualified institutional investors.
WHAT IS THE 144A BOND offering PROGRAM PROCESS LIKE?
To apply and qualify for local or international real estate project financing through the 144A bond program, you need to;
SEND PRELIMINARY BOND PACKAGE
When applying for financing through the 144A bond program, you need to prepare and send a preliminary bond package.
This includes a PPM document for review, and consideration.
MULTIPLE CONFERENCE CALLS HELD
Once your preliminary bond package has been received, multiple conference calls will be held as part of the due diligence process.
LENDING COMPANY ANALYSIS AND PRE-UNDERWRITES
Further due diligence will be carried out by the lending company and underwriting process commenced.
The application has to meet all the necessary 144A bond funding requirements.
LENDING COMPANY ISSUES A POSITIVE OPINION IN 1-2 WEEKS
If the financing application is approved by the lending company, a positive opinion will be issued within 1-2 weeks of receipt of the preliminary package.
LENDING COMPANY IS ENGAGED AND YOU PAY UNDERWRITING FEE
Upon issuance of a positive opinion, you will be required to engage the lending company.
Then you will be required to pay underwriting fees due on the loan amount requested.
144A BOND IS CREATED
After paying the underwriting fees due on the loan requested, a 144A bond will then be created.
GET FINANCING
Once the 144A bond has been created, the lending company will release the loan funds to your bank account.
WHO CAN WRITE A private placement memorandum (PPM) DOCUMENT FOR YOU?
You can hire a securities lawyer, investment banking consultant, or a professional PPM writer to draft the document for your company.
Though costs of writing a PPM vary, it is important that you select and work with whoever fits within your budget.
Select who can write a proper PPM document targeted towards the 144A bond financing companies, you want to seek funding from.
18 ADVANTAGES OF 144A BOND offering FINANCING
- Lender funds 99% of total project cost (only 1% down payment needed)
- No funding cap (loans from US$10 Million minimum No Maximum)
- Non-recourse, no personal guarantee
- 100% LTV/LTC
- No loss of project equity
- Turn around time (closing timeline) is between 90-120 days
- Flexible repayment terms offered
- No asset verification
- Best efforts basis
- Funding available worldwide (International projects are funded)
- No credit checks
- Option to defer payments up to 12-24 months
- Financing can be done in one lump sum
- Low underwriting fees
- No upfront costs to borrower other than third party reports
- Costs of third party reports reimbursed at the time of funding
- Up to 30 years amortized 4.5% - 8.00% Interest rate (only during construction)
- No prepayment penalty
DISADVANTAGES OF 144A BOND offering Funding
- Limited to companies and not individual investors
- Prohibitive third party costs, fees and PPM requirement
- All borrower's assets used as collateral for the loan
What projects can be funded with 144a bond offering Financing?
Construction
Rehab
Agriculture
Oil and Gas
Mines
Technology
Energy
Pharmaceutical
Major Business Acquisition/Expansion
Medical Practices (Dental, Veterinary, Ophthalmology and all Surgery Practices)
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