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Mballack
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Joined: February 5th, 2004, 12:33 am

A business expansion plan question

October 4th, 2010, 8:52 am

I was reading a business expansion plan and I could decipher the meaning of one paragraph related to the investments in th firm:the paragraph reads as:"Investors will be expected to provide loan guarantees where required for the facility in which they are invested. Monetization of the investment will only be considered pn an enterprise transaction"The company is planning to open two new facilities in which the investors can invest up to 46 % in each facility (i.e. up to 14% of the verall enterprise). First,I didn't get the point why these investors should provide loan guarantees.Second I didn't get at all the sentence of Monetization. what should this sentence imply?Regards
 
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daveangel
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Joined: October 20th, 2003, 4:05 pm

A business expansion plan question

October 4th, 2010, 2:14 pm

Quote considered pn an enterprise transaction is there a typo here ?Quote First,I didn't get the point why these investors should provide loan guarantees. doesn't sound like this is an equity investment
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LochWulf
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Joined: June 17th, 2009, 1:52 pm

A business expansion plan question

October 4th, 2010, 2:46 pm

Taken by itself the monetization clause sounds like a version of the typical "investments may be cashed out only upon the occurence of a XXX event", with "XXX" being specifically defined elsewhere to include things such as a merger into another entity, a wholesale disposition of the assets, a large refi...etc. Check the definitional section of the plan for "enterprise transaction"; you may find it to be a term that describes such 'capital' events.But, its placement within a paragraph that discusses the investors putting up their balance sheets to backstop the financing seems out of place, unless it's just a bullet-point listing of things a would-be investor needs to know.