Our Equity Involvement
In the world of finance post 2008, lenders and financial institutions are hesitant to invest 100% equity into a company. Most New York finance funds and hedge funds will take a majority ownership of a company, or require 30-40% cash involvement in the project in order to consider financing. After a tedious and time-consuming process the majority holder may not have the same vision for the investment organization that the founder had envisioned. Our goal is to maintain the owner’s vision and to retain minority ownership in the company. With our program, companies and projects can be financed with as little as 10- 15% of the total amount of the project, as it is required as equity involvement. Why 10-15%?
In our program, we use insurance policies to wrap and insure the project. These insurance policies are leased typically 3-5 years. We pay a leasing fee of 15-25% of the entire policy in order to use the policy as collateral based “completion bond” to insure the project and to guarantee to the investor, our lender, full collateral and protection on investment. These insurance companies we work with are: Peoples Insurance, Fireman Fund, IFG, Aon, Amtrust, Northwestern Mutual and Transamerica
Part of the required 10-15% of the entire project required upfront is to pay for the lease of this insurance policy. LENDER, LP normally pays for the remainder 10-15% of the policy cost, thereby becoming an immediate equity partner in the project. Together with the escrow from both parties, the insurance policy is acquired and placed in the name of the company. The insurance policy is only issued once approval from the insurance company is granted. This approval comes after the full detailed business plan and financial spreadsheets are put together on the company being insured. In addition, LENDER, LP pledges assets from the balance sheet of LENDER, LP to pay and collateralize the insurance policy.
The 10-15% is placed into escrow at Leagles, Inc. Arlington TX at Amegy Bank in Houston Texas – the escrow is placed at Leagles Amegy Bank due to our outstanding relationship with Amegy Bank and the insurance carriers that we work with. We can be rest assured that the money is safe and that we have full control, as one of our investment liaisons co-owns Amegy Bank. This is a great safety precaution.
Once the 10-15% is placed into escrow, it is used immediately to purchase the insurance policy; 80% of the 10-15% is a refundable cashable check that is issued once placed into escrow and the remaining [20%] is refundable in cash collateral placed into escrow.
Security - Investors financial security is our primary concern. We have taken several security measures to make sure investors’ security is protected:
Cash Collateral – Escrow amounts up to $10M are backed by cash collateral, thereby insuring escrow deposits cash backed, should any default happen in the deal. Leagles Inc. insures the deposit and will sign a cash collateral promissory note.
CD – A full CD is issued from Scotia Bank for the escrow deposited and is cashable in 1 year and 1 day.
Process Outlined
The following is the process of how one of our film projects is financed:
Our investment team has a unique combination of different businesses relationships, technology domain knowledge, investing experience, and operating expertise. Businesses that partner with us expect to transform themselves through the strategic use of technology and licensing, as well as improvements in core marketing, distribution, and operating processes.
In our program, we use insurance policies to wrap and insure the project. These insurance policies are leased typically 3-5 years. We pay a leasing fee of 15-25% of the entire policy in order to use the policy as collateral based “completion bond” to insure the project and to guarantee to the investor, our lender, full collateral and protection on investment. These insurance companies we work with are: Peoples Insurance, Fireman Fund, IFG, Aon, Amtrust, Northwestern Mutual and Transamerica
Part of the required 10-15% of the entire project required upfront is to pay for the lease of this insurance policy. LENDER, LP normally pays for the remainder 10-15% of the policy cost, thereby becoming an immediate equity partner in the project. Together with the escrow from both parties, the insurance policy is acquired and placed in the name of the company. The insurance policy is only issued once approval from the insurance company is granted. This approval comes after the full detailed business plan and financial spreadsheets are put together on the company being insured. In addition, LENDER, LP pledges assets from the balance sheet of LENDER, LP to pay and collateralize the insurance policy.
The 10-15% is placed into escrow at Leagles, Inc. Arlington TX at Amegy Bank in Houston Texas – the escrow is placed at Leagles Amegy Bank due to our outstanding relationship with Amegy Bank and the insurance carriers that we work with. We can be rest assured that the money is safe and that we have full control, as one of our investment liaisons co-owns Amegy Bank. This is a great safety precaution.
Once the 10-15% is placed into escrow, it is used immediately to purchase the insurance policy; 80% of the 10-15% is a refundable cashable check that is issued once placed into escrow and the remaining [20%] is refundable in cash collateral placed into escrow.
Security - Investors financial security is our primary concern. We have taken several security measures to make sure investors’ security is protected:
Cash Collateral – Escrow amounts up to $10M are backed by cash collateral, thereby insuring escrow deposits cash backed, should any default happen in the deal. Leagles Inc. insures the deposit and will sign a cash collateral promissory note.
CD – A full CD is issued from Scotia Bank for the escrow deposited and is cashable in 1 year and 1 day.
Process Outlined
The following is the process of how one of our film projects is financed:
- Escrow is Placed into Leagles Inc. [10-15% of project]
- Escrow Issues Cash Collateral Promissory Note in escrow
- Escrow is protected with CD
- Escrow is protected under Lawyers Trust
- Insurance policy is purchased for 2 times the amount of the project
- Insurance cost is 15-25% of the entire project
- LENDER, LP becomes an equity partner in the project [normally 20-35%]
- Insurance underwrites the entire project and issues insurance policy
Mutual and A rated bonds are pledged to have the policy issued
- Policy is issued from Aon, TransAmerica, Amtrust, Northwest Mutual
- 3-5 years
- ROI / Interest Required 9-12% per annum
- Policy is loaned normally 80-90% LTV
- Bank issues A Rated / Investment Grade Promissory Note
Not issued until completion bond for film is paid for. Part of escrow is used to purchase the completion bond from IFG, AFIG - Bank then issues investment grade promissory note
- Once the Bank promissory note is issued, we go to our capital providers and get a line of credit
Line of credit against promissory note is issued from: Scotia Bank, Bank of Montreal, Qatar Bank, City National, Brown Brother Harriman , Northern Trust
- LENDER, LP disburses as either debt or equity instrument
- Typically 24-36 months term
- 25% minimum equity required
- Pre-Post Screen Executive Credit
Our investment team has a unique combination of different businesses relationships, technology domain knowledge, investing experience, and operating expertise. Businesses that partner with us expect to transform themselves through the strategic use of technology and licensing, as well as improvements in core marketing, distribution, and operating processes.