Equity Line Facility
An Equity Line Facility (ELF) is a flexible financing structure in which Dutchess commits to purchasing ordinary shares directly from a company, at prevailing market prices, over a multi-year period. When a company elects to drawdown on the ELF, Dutchess is obligated to purchase an amount of shares equal to the dollar amount requested, priced at a small discount. The company can continue to request drawdowns, at their discretion, in accordance with the terms of the funding agreement.
Advantages of an Equity Line Facility
Dutchess’ ELF provides companies with the ability to dictate when they raise capital. The company decides on the amount and timing of each drawdown by simply notifying Dutchess of their request to drawdown on the ELF. As a result, the company has quick access to capital and can take advantage of sudden surges in their stock price and volume to infuse capital, or to strategically implement capital over time. Having an ELF in place can provide a company with increased financial stability. The ELF can also eliminate the arduous process of road shows, as well as negotiations with bankers and investors, because the company is able to directly raise funds through Dutchess.
With Dutchess’ ELF, there are no:
- Minimum or maximum drawdown requirements
- Fees or penalties for inactivity or termination
- Restrictions on other sources of funding
- Need for periodic due diligence
- Additional costs
Why an ELF?
As a result of the downturn in the global equity markets, many financial institutions are not extending capital. Therefore, the prevalence of the Equity Line Facility has expanded across worldwide exchanges. For over 15 years, Dutchess has been a market leader and provider of Equity Line Facilities, and has committed over $2,000,000,000 in capital backing. Despite the rampant market volatility, Dutchess’ Equity Line Facility continues to provide a myriad of companies with financial assurance.
The ELF is the most flexible funding solution available to public companies. We invite you to call a member of our corporate finance team to request a term sheet, or to have a conversation about how our ELF can help fulfill your company’s capital requirements.
Equity Linked Securities
Equity Linked Securities (ELS) are short-term promissory notes which are structured in conjunction with an Equity Line Facility (ELF). The company receives a lump sum of capital shortly after approval of the ELF from management. The note usually carries a term of 90-180 days. It works perfectly for companies that need a quick cash infusion to get a product launched, hire new sales people or start new operations. The company repays the ELS through a schedule of monthly payments with cash generated from operations or the funds drawn from the ELF.
With proper use, a company can use the ELF to pay back the ELS as the share price rises, which limits dilution.
The company has the added benefit of funding its capital needs not only with the cash infusion of an ELS, but the proceeds drawn from the ELF. Certain criteria are reviewed to determine the company’s qualifications for an ELS such as balance sheet, trading liquidity, use of proceeds, etc.
Dutchess also offers other types of financing to publicly traded companies in the UK. To see if you qualify, please feel free to contact us.