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Regarding your request to borrow $2 million USD against the equipment associated with the non operating company they seek to acquire in Australia we can help. The finance group that we represent will structure the loan with a 50% loan to value (LTV) against the current “as is” value of the equipment with a 50% LTV against its “as is” value. Based on the value on the worksheet and applying the advance rate above a $2,000,000 would be easily obtainable. The lender has a minimum loan of $3,000,000 USD, however. The loan will be structured with a 4-year term amortized over 8 years, priced at 14%, annually. The client must stay in the loan for 4 years and there will be a closing fee of approximately 6 points to the lender on the loan amount which can be paid out of the loan proceeds. The monthly payment on a $2,000,000 loan priced at 14% per annum and amortized over 8 years would be $52,114. They can set aside funds form the $3,000,000 to prepay or cover the monthly payments. The lender must be satisfied that your client can cover the monthly debt service on this loan. Prior to closing, the client will be required to cover the routine expenses of the finance group needed for their due diligence to close the loan and it will take 30 to 45 days to close. If you want to proceed, we will prepare a formal broker engagement document and would require a $4,815 USD including GST REFUNDABLE retainer. A 3 point-closing fee for arranging the financing would be required, payable out of loan proceeds at closing. Please advise.

Dotun sent Today at 6:19 AM

I have never borrowed money like this, hence needed guidance

Regarding your request to borrow $2 million USD against the equipment associated with the non operating company they seek to acquire in Australia we can help. The finance group that we represent will structure the loan with a 50% loan to value (LTV) against the current “as is” value of the equipment with a 50% LTV against its “as is” value. Based on the value on the worksheet and applying the advance rate above a $2,000,000 would be easily obtainable. The lender has a minimum loan of $3,000,000 USD, however. The loan will be structured with a 4-year term amortized over 8 years, priced at 14%, annually. The client must stay in the loan for 4 years and there will be a closing fee of approximately 6 points to the lender on the loan amount which can be paid out of the loan proceeds. The monthly payment on a $2,000,000 loan priced at 14% per annum and amortized over 8 years would be $52,114. They can set aside funds form the $3,000,000 to prepay or cover the monthly payments. The lender must be satisfied that your client can cover the monthly debt service on this loan. Prior to closing, the client will be required to cover the routine expenses of the finance group needed for their due diligence to close the loan and it will take 30 to 45 days to close. If you want to proceed, we will prepare a formal broker engagement document and would require a $4,815 USD including GST REFUNDABLE retainer. A 3 point-closing fee for arranging the financing would be required, payable out of loan proceeds at closing.

Note: I am an Aussie with local experience – on a cursory basis and the fact your have no experience swimming with sharks – this should not be your first deal. Ease in to the water.

What is your knowledge of Australian Corporations & Tax Law?

The requirement for you to stay in 4 years jeopardizes all other deals during that period.

Why jeopardize your future?,

Who is the Lender?

The 14% can kill you – loan will double in 6 years – sending you out the back door

Adding 3% year one puts you on a cliff. and the 6% paid out of loan proceeds puts you under water day one. Have you done all the numbers?

For advice to be effective I need more information on – the financials, details of the business – what it does, why you want it, how much you intend to pay, how you are structuring the loans and shareholdings, the time lines – for DD, Acquisition, the deal , the investors, your business plan, your business structures & own financials.

You should not sign the loan agreement as a principal – i.e. have you set up a new P/L Co. or offshore entity?

What is the name of the operating company, have you secured rights to that name?

Note: If you fail to make a payment they can take away your equipement and so be unable to operate. What is your plan for that?

Instead of a loan have you looked at an alternative – such as selling the equipement to a leasing company (for more than the 50% LTV offerred by the Barracudas) … then lease back the equipement and get a tax benefit to help write off assessable profits. What is the profitability of the business? What are COGS? How will you pay for expenses, wages, super , COGS?

Who is the seller? Purchase Price, Vendor Finance, terms, deposit, other investors, total raising, EBITDA & Cash Flow, Number of Employees, Wages, Superannuation liability to workers & all debts, operating costs, notes payables, guarantees.

What is the Value of the Business, and Receivables? *(and Ageing)