Equity Kicker

Categories: Stocks, Investing

It's set. It’s hiked. It’s up. It’s gooooooddddd.

Okay, yeah, you knew we were gonna start there.

In FinanceLand, an equity kicker is usually a deal sweetener for debt. So…Shmoopicon Valley Bank loans whatever.com 5 million bucks at 8 percent interest.

But with a catch.

The bank doesn’t feel that 8 percent is enough to cover the risk and other crap that whatever.com brings with it. They ain’t Google. So in addition to the 8 percent interest, Shmoopicon Valley Bank wants an equity kicker in the form of 3 percent warrant coverage.

That is, they want 3 percent of the value of the loan of 5 million...or 150,000 shares of whatever.com thrown in as part of the deal. Those 150,000 shares are equity, and they kick the debt deal to be worth a lot more, should things go well at whatever.com.

But, um, we’re not hopeful.

Related or Semi-related Video

Finance: What is Equity Kicker?8 Views

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Finance allah shmoop what is an equity kicker It's that

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it's hiked it's up It's good Okay yeah You knew

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we were going to start their well in finance Land

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and equity kicker is usually a deal sweetener for debt

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or lenders So shmoop akane valley bank loans whatever Dot

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com five million bucks at eight percent interest but with

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a catch and not a football catch get down The

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bank doesn't feel that eight percent is enough to cover

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the risk and well other craft that whatever dot com

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brings with it they ain't google So in addition to

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the eight percent interest shmoop akane valley bank wants an

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equity kicker in the form of us A three percent

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warrant coverage That is they want three percent of the

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value of the loan of five million bucks or one

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hundred fifty thousand shares or warrants to buy a share

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It's like a really cheap price The option of whatever

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dot com thrown in as part of the deal those

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one hundred fifty thousand shares our equity and they kick

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the debt deal to potentially be worth a lot more

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Should things go well at whatever dot com but yeah 00:01:09.099 --> [endTime] We're not hopeful

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