AIG Ltd.
Commercial Bancorp
ALIANT INVESTMENT GROUP LTD. CBC
Private Debenture Capital Investment Program (PDCIP) Program
(Summary, Procedural mechanics, Critical path & Costings)
As follows:
The following summary is provided to the reader in support of commonly
asked questions and in provision of specific information / disclosure regarding
private debenture capital investments and their guidelines and
applications. This information is intended to educate and focus, assisting
with the understanding of the program and all its parameters.
Simply put the Private Debenture Capital Investment Program (PDCIP)
is one that utilizes the CLASS "A" preferred shares of a company,
capitalized by investors from pre-qualified capital investment markets
that AIG underwrites the prospectus for and then markets to through its
independent Securities Agent/Broker network in the form of (what is
commonly termed) a private debenture , raising those capital funds
that a client needs for a particular project or business enterprise;
particularly one that is start up in nature and/or otherwise by its
nature simply does not categorically qualify for conventional asset or
UCC based debt financing.
The CLASS “a” shares that are issued (determined pro rata by the
dollar amount of the required capital investment & the denomination
that the market dictates) carry a fixed rate of return (in today's market
from 8 to 12%, qualified at 100x earning of the current fixed annuities
markets [6%], adjusted in analysis for perceived risk as qualified by
AIG ), and whose ROR (rate of return) then begins to be repaid at the
time the company begins cash flowing (as qualified). Based on a
company's pro forma, business plan, marketing plan, management
and use of funds we pre-qualify the term, rate of return and capital
market(s). Customarily the term is a 3 to 10 year period. Rate of return
is determined by the project itself and the current capital market(s) for
that particular type of investment.
The PDCIP also carries a convertible feature that allows (by mutual
agreement of the investor and the client) for the investor to convert
his/her/their shares to class "C" common stock and forego
repayment of principal & ROR in lieu of a longer term relationship
with the client and business/project; thus collecting annual dividends
(NOI pre-tax) as the company prospers.
Underwriting of a Private Debenture investment takes approximately 60 to 90
business days to pre-release and then approximately another 60-120 days to market
and commencement of close of the debenture shares. These time lines are only an
estimate and may vary depending on Client readiness and other variables individual to each
underwriting as they occur. A one-time underwriting/debenture programming/ offering
prospectus cost applies, whose scope of services direct and indirectly are:
(i)
Underwriting prospectus to include all marketing tools/data for the debenture
offering including but not limited to accounting, risk analysis, legal drafting and
completion of CI SPA agreements for Capital Investors, design & preparation of
certificates to be issued, related company resolutions, marketing, interface with CI
markets and proposed CI participants, offer formatting presentation of the complete
offering statement & certificates, website development as required, all related legal
work, processing for pre-release. (ii) Independent Marketing and Brokerage / sales
completed through AIG applicable affiliated networks and along with client networks
and direct sales generated from 3rd party venues, and (iii) AIG closing
assistance/oversight, Fiduciary services (optional & as agreed to ), document /
certificate issuance and management for closing of the individual debenture sales as
required of each debenture (stock) sale as it takes place. (iv) Underwriting/File
Submission to CI investor(s) on behalf of the client in their own marketing efforts, if
any, of the private stock offering as AIG may be called upon by the CLIENT and at
AIG’s discretion and by mutual consent to act upon same.
Underwriting & Debenture Closing Costs:
> Debenture underwriting costs range from +/- .50%. This cost is determined
and fixed at the time of preliminary review and qualification. Speak with your AIG
Representative regarding a specific project cost based risk and other qualification
assessments made at the time of initial review. THERE ARE NO OTHER
underwriting costs that apply.
> Legal Fees are included in the service underwriting cost.
> Standard Brokerage fees of 3.5% of the debenture paid pro rata at close apply.
These are paid on direct basis (deducted from each sale) to the Broker and or his
firm.
>Bank transfer Fiduciary fees in the amount of 50.00 per transaction US and
60.00 per transaction international apply. These are also paid on direct basis
(deducted from each sale) to the Broker and or his firm.
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ACTUARY DATA:
SECTION I: (Summary data)
Class “A” Preferred stock certificates
Class “A” Preferred stock certificates (also called preferred shares,
preference share certificates or simply preferreds) are a privately issued
equity/debt instrument of a company which may have any combination of
features not possessed by a company’s publicly traded common stock including
properties of both equity and/or a debt instrument, and are generally considered
a hybrid instrument. Preferreds are senior (i.e. higher ranking) to common stock.
Preferred stock certificates usually carry no voting rights, but may opt to
carry a dividend and have priority over common stock in the payment of ROR,
dividends and principal capital invested upon sale or liquidation of a company.
Terms of the preferred stock certificates are stated in what is sometimes referred
to as a “Designation of Certificate” or similar clause included in a capital investors
S t o c k purchase agreement (SPA) when sold to him or her or them.
Class “A” Preferred stock certificates are a special class of shares which
again may have any combination of features not possessed by common stock.
The following features are commonly associated with class “A” preferred stock:
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Preference in dividends or interest payments if/when structured as a hybrid debt
instrument
Preference in principal capital investment repayment , in the event of Sale or
liquidation
Convertibility to common stock as agreed to.
Callability/early retirement, at the option of the corporation
No ownership or recourse rights of the investor in the event of non-payment / default by the
client of interest and/or principal payment
Nonvoting
Non Management
Commonly underwritten for start-up business concerns or a company seeking to
advance company growth without going to the common public market(s) or encumber
itself with additional conventional debt burden(s) that could potentially adversely affect
its credit rating or standing. Or simply in cases where the company does not categorically
qualify for conventional asset or UCC based debt financing.
Class “A” Preferred stock certificates are not publicly traded. They are
underwritten in the same manner as Class “C” publicly traded stocks but require
no SEC regulation or Licensed Securities Broker to market them.
Class “A” Preferred stock certificates are most commonly marketed to
private individuals, groups or organizations of private individuals, business
investment groups small and large, and related business concerns or affiliates;
all seeking investment in companies or business concerns where an acceptable
risk return is balanced by a governing market of expanding opportunity.
Section II: (Offering data & comparative information)
Typical Publicly traded class "C" debenture offerings can take up
to one year to underwrite for marketing, an additional minimum
of 9 to 12 months to market, cost up to 5% of the amount to
be raised in underwriting costs plus 5+% in commission costs,
come under strict SEC hold backs and reserve regulation for
Public offerings, and rely on random mass marketing to "ALL"
general capital markets in the hopeful expectation of capturing a
broad base sales initiative/return; thus raising the capital
investment the client is seeking and only permit the use of
funds once 100% of the raise has been completed. The
‘more bang for the (hopeful) buck’ methodology being the
application focus in reaching the finance goal.
Conversely, a Private Class "A" preferred offering takes some 60
to 90 days to underwrite as the capital investment markets are
specific ( energy, transportation, etc. ) and pre-qualified prior
to underwriting. The private nature of the debenture allows the
capital investment to (i) function more like a debt instrument,
being offered to proverbial ‘potential lenders’, and (ii) does not
come under SEC scrutiny as all capital investments are private
and NOT publicly marketed. (iii) The underwriting /prospectus
/offering product that AIG produces, is the tool used to
secure the qualified markets and in turn close the capital
investment requirements of the client. And (iv) unlike the capital
use restrictions associated with a Public offering, funds raised
from a Private debenture are used by the client / company
AS THEY ARE RECEIVED from the capital market investors ; thus
allowing for the greater success of the project or business
allowing for plan implementation in 'real time.' (v) The market
pre qualification/identification aspect of the process also serves to
increase the capital investment success ratio by prior identifying
the appropriate venues and risk/return(s) that are being sought
and desirable. (vi) The work product is also made available to
the client so that they too may use this program/tool in their own
efforts to illicit capital investment dollars from sources they may
wish to capture and/or otherwise have available to them by way
of use of ‘this tool’.
Risk assessment/reduction for any capital investment, Public or
Private, is always at the center of the underwriting process.
Pre- qualification, Private marketing, flexible terms for both
investor and client, and marketing through the use of AIG
associate Licensed Brokers, whole sale conduits and secondary
market conduits as well as client resources focus success and
greatly reduce and mitigate failure and risk.
In summation a 'snapshot' of the steps of the process look like this:
1. Preliminary review and analysis for prequalification of a client business plan / project.
Formal qualification requires submission of the following documentation:
a.
b.
c.
d.
Executive Summary including Management Summary & Marketing Plan
A detailed use of funds summary (UOF)
A TEN (10 ) year P&L Pro forma for the project
An interim year to date P&L as applicable ( for existing Business
Operations ONLY )
e. Current year to date P&L with Balance statement ( for existing Business
Operations ONLY )
f. A ramp up summary specifying when the project will reach YEAR ONE (1)
positive cash flow (stabilization) as it is disclosed in the P&L pro forma
2. Formal pre-qualification of the business plan/project including but not limited
to the qualification of the select capital investment markets for the project
and the required ROR, investment term, costings and other factors as they
apply; followed by issuance of t h e A I G prequalification transmittal and
financial analysis to/for the client, for their final review, approval and
execution.
3. Issuance, review, execution and compliance of the AIG Debenture Service
Underwriting Agreement (DUSA). (AIG Debenture underwriting costs “ DUE AND PAYABLE at
the time of execution of the AIG/Client DUSA agreement)
4. Receipt of all underwriting exhibits from the client to AIG necessary to
complete the debenture underwriting.
5. Underwriting and completion of the debenture underwriting resulting in the
debenture programming file/data for pre release to AIG Associate Brokers &
Client for marketing to the capital investment markets.
6. Release of the debenture file programming data to ALL capital investment
markets and investors in order to secure each pro rata share of the total capital
investment required and in turn the total capital investment dollars for the
project.
7. Close and recording of capital investment(S) to the client.
8. Disbursement of NET* finance investment capital to the client for use of capital
investment funds, in accordance with the project business plan, to complete the client
project and cash flow the business operation(S).
*NET funds represent closed funds less applicable Brokerage and Bank transfer costs.
The above completes the details and summary of the Procedural mechanics and critical path for
proposed private debenture capital investment programming and related underwriting as provided by
AIG Ltd. Commercial Bancorp.
Should you have any additional questions that we can answer for you please feel free to call or email
AIG at your convenience. Thank you for the time and opportunity to detail the program to you and
we look forward to your earliest reply in the hope that you will wish to have us underwrite your
capital needs utilizing this program.
Thank you.
Respectfully submitted by,
AIG Ltd. Commercial Bancorp
AIG:cg v. 2‐2015