Mezzanine financing refers to a form of financing between priority debt and equity financing in terms of risks and benefits. Then, will you analyze the case of mezzanine financing business of trust companies?
Equity mode of trust mezzanine financing
By setting up a trust plan, the trust company will put the raised trust funds into the special purpose company (SPV) with good bankruptcy isolation in the form of equity, and the special purpose company will be responsible for the project operation and finally get the investment income.
1. Capital entry mode:
(1) Establish SPV with the financing party.
(2) Capital increase and share expansion of the established special purpose company;
(3) Replace the SPV equity held by the financing party with the beneficial right of trust and increase capital and share.
2. Exit channel:
(1) The third party buys the equity of the special purpose company held by the trust plan at a premium (the third party includes the parent company and affiliated company of the special purpose company, etc.). );
(2) A third party purchases the beneficial right of trust held by mezzanine investors at a premium;
3 use? Category preferred stock? Investment income distribution.
? Preferred stock refers to the equity capital that enjoys the residual claim priority over common stock. Preferred stock has the right characteristics of priority distribution and stable income. First of all, preferred shares rank before common shares, and the company's profits should first pay the creditors' principal and interest and pay taxes; The second is to pay dividends on preferred shares; The dividend of common stock is finally distributed. No matter how the company's profit level changes, the dividend yield of preferred shares remains unchanged. Second, give priority to the allocation of surplus assets. In the distribution of the company's remaining property, preferred shareholders rank after creditors and before ordinary shareholders. However, under the existing legal system in China, the concept of preferred stock is not recognized. In trust, different levels of beneficial rights can be structured, which reflects the institutional arrangement completely similar to preferred shares.
3. Risk analysis:
(1) Risk of project operation failure;
(2) Moral hazard of the financier: possible promises cannot be fulfilled as scheduled;
4. Risk control measures:
(1) Guarantee measures: Due to insufficient mortgage of the debtor, a third party may be requested to provide guarantee or joint liability guarantee. The third party may be the debtor's holding company, affiliated company or guarantee company.
(2) Trust mechanism: a structural arrangement is set in which the beneficiary right of trust takes precedence over the inferior one, and the financier or a third party willing to take higher risks will buy the inferior beneficiary right and give priority to protecting the principal and income of investors with priority beneficiary right.
(3) Governance mechanism: mainly protect the interests of investors from the daily management of the company, the use of funds and project management, and avoid moral hazard of the financier. Specific measures include one-vote veto at the shareholders' meeting; The right to appoint the board of directors, chief financial officer and other core management personnel of the company; The right to approve the use of funds; Capital account, supervision of use direction, etc.
5. Typical case:
On March 1 2006, a trust company issued it? Lishui Xinting Real Estate Investment Trust Plan? .
(1) Product name: Lishui Xinting Real Estate Investment Trust Plan.
(2) Issue scale: 520 million yuan (including 200 million yuan for priority beneficiary rights and 320 million yuan for general beneficiary rights).
(3) Trust time: 2.25 years (in which Class A priority beneficiary right is expected to end early within 24 months after the trust is established);
(4) Trust method: equity investment.
(V) Usage of funds: The funds raised in this trust plan are used to transfer a real estate company in Shanghai (hereinafter referred to as? Real estate company? ) 85% equity.
(6) Income sources and distribution: Trust income rights are divided into Class A (priority beneficiary rights) and Class B (general beneficiary rights). Class A (priority beneficiary right) is raised from social investors and institutional investors; Class B (general beneficial right) is aimed at coastal real estate companies. Among them, the scope of trust interests under the priority beneficiary right is the sum of the trust funds of the priority beneficiary right and the income calculated according to the expected annualized rate of return of 5.5%.
(7) Risk control: Limited company (Hong Kong listed company) provides irrevocable joint liability guarantee for share premium repurchase.
The loan mode of trust mezzanine financing
By setting up a trust plan, the trust company will distribute the raised trust funds to the special purpose company (SPV) with good bankruptcy isolation in the form of creditor's rights. The special purpose company will be responsible for the project operation, and finally get the investment income, and repay the principal and interest according to the loan contract when it expires.
1. Capital entry mode:
Issued to special purpose companies in the form of creditor's rights.
2. Exit channel:
(1) The debtor repays the principal and interest according to the loan contract;
(2) The third party buys the beneficial right of trust held by mezzanine investors at a premium.
3. Risk analysis:
(1) Risk of project operation failure;
(2) Moral hazard of SME financiers: possible promises cannot be fulfilled as scheduled.
4. Risk control measures:
(1) Guarantee measures: Due to insufficient mortgage of the debtor, a third party may be requested to provide guarantee or joint liability guarantee. The third party may be the debtor's holding company, affiliated company or guarantee company.
(2) Trust mechanism: the structure arrangement of priority over inferiority is set in the trust beneficial right, and the SME financier or the third party willing to take higher risks will buy the inferior beneficial right and give priority to protecting the principal and income of the investors with priority beneficial right.
(3) Governance mechanism: mainly protect the interests of investors and avoid moral hazard of SME financiers from the aspects of daily management, fund use and project management. Specific measures include one-vote veto at the shareholders' meeting; The right to appoint the board of directors, chief financial officer and other core management personnel of the company; The right to approve the use of funds; Capital account, supervision of use direction, etc.
5. Typical case:
On March 20th, 2006, a trust company launched? A real estate company Longrun Garden collective fund trust plan? .
(1) Product name: a trust company * * Longrunyuan collective fund trust plan;
(2) Issue scale:10.60 billion yuan;
(3) Trust time: 2 years;
(4) Trust method: trust loan;
(5) Use of funds: distributing trust funds to a real estate group company in Shanghai in the form of loans for the construction of the * * Langrun Garden project located in a road in Minhang District, Shanghai;
(6) Sources and distribution of income: interest income from trust loans and income from capital market and capital market operation before distribution of trust benefits;
(7) Risk control: The trust company and the shareholders of the real estate company signed the Equity Pledge Agreement, and the shareholders of the real estate company pledged some of their shares to the trust company. If the real estate company fails to repay the loan principal and interest as required, the trust company will take necessary measures to ensure the safety of the credit loan principal and interest.
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