Loan Finance raise funds

Loan Finance raise funds

1. Debentures loan stock

   • Formal Document
     • Dates of Interest Rates of Interest Repayment of Capital
   • Security for Debentures
     • Fixed Charges
       • Legal / Equitable mortgage on land or buildings
       • Need chargee's agreement to sell
     • Floating Charges
       • Unattached to property
       • Can Sell
       • Can charge against assets - less fluid than mortgage
       • Does not attach unless crystalisation occurs (i..r. if company cannot pay its debts)
       • lower priority than fixed in term of paying back through company assets
     • Priority of charge
     • Needs to be registered in 21 days (if not fine)
     • Fixed charge has priority of floating charge
   • Can be secured on an asset or charge
   • Usually cheaper to issue than shares
   • Do not allow voting rights
   • Do not need to get permission from board
   • Interest payable is allowable deduction from profits for corporate tax purposes
   • High Gearing - High level of debenture in relation to share capital - can effect market price of shares