Method and system for financing publicly traded companies

• US 20040064398A1
• Filed: 04/04/2003
• Published: 04/01/2004
• Est. Priority Date: 09/26/2002
• Status: Abandoned Application

• Current Assignee: Quocap Financial Incorporated
• Original Assignee: Quocap Financial Incorporated
• Inventors: Graham, Gary J., Van Norstrand, Michael, Browne, Spencer I.
• Application Number:
  US10/407,104
• Publication Number:
  US 20040064398A1
• Time in Patent Office: Days
• US Class Current: 705/37
• CPC Class Codes: G06Q 40/02 Banking, e.g. interest calculation or account maintenance credit or loans G06Q40/03
• CPC Class Codes: G06Q 40/04 Trading; Exchange, e.g. stocks, commodities, derivatives or currency exchange

Abstract

A method and system for financing publicly traded companies. According to one embodiment, a client provides collateral for receiving financing. Such collateral includes, on one hand, pledged assets, for example, accounts receivable, equipment, inventory real estate and the like, and on the other hand, stock. The stock is transferred to an entity, such as a limited liability company (LLC). The stock may be liquidated throughout the term of the financing or upon default by the client. If the client defaults, the cash and stock are provided to the lending party; where the LLC is majority owned by the client and the client does not default, at the end of the term, the client has a funded financing company in the form of the LLC.

Claims

1. A method of providing a publicly traded company funding in an amount, A, the method comprising:

identifying fixed assets of the company, the fixed assets having a value, V, to be pledged as collateral to secure funding,

identifying a number, N, of shares of listed stock having a price per share, P, to be pledged as additional collateral to secure the funding;

determining an advance rate percentage, R, of the pledged fixed assets;

determining a ratio, M, of total stock collateral value (N×

P) to excess loan amount (A−

(R×

V)); and

approving the funding, A, where;

$A=\left(R\times <br><br>V\right)+\frac{\left(N\times <br><br>P\right)}{M.}$

2. The method of claim 1, wherein R is about 70 or greater.

3. The method of claim 1, wherein M is about 1 or greater.

4. The method of claim 1, wherein M is in the range of about 2 to about 20.

5. The method of claim 1, wherein A is about 110% or more of V.

6. The method of claim 1, wherein, prior to funding, the listed stock is owned by the publicly traded company desiring financing.

7. The method of claim 1, wherein, prior to funding, the listed stock is owned by an affiliate company of the publicly traded company desiring financing.

8. The method of claim 1, further comprising registering the shares of stock pledged as collateral by the company in the name of a newly formed entity.

9. The method of claim 1, wherein M is determined based on at least a risk analysis based in part upon the company, the pledged fixed assets, and stock.

10. The method of claim 1, wherein the fixed assets include one of the following types of assets:

accounts receivable;

equipment;

inventory; and

real estate.

11. A method of providing a publicly traded company funding in an amount, A, the method comprising:

receiving at least one application for a loan from the company, the application including information identifying at least (i) the name of the company, (ii) fixed assets of the company, the fixed assets having a value, V, to be pledged as collateral to secure funding, and (iii) a number, N, of shares of listed stock having a price per share, P, to be pledged as additional collateral to secure the funding;

determining the advance rate percentage, R, of the pledged accounts;

determining a ratio, M, of total stock collateral value (N×

P) to excess loan amount (A−

(R×

V)); and

approving the funding, A, where;

$A=\left(R\times <br><br>V\right)+\frac{\left(N\times <br><br>P\right)}{M}$

establishing a separate entity, and

registering the shares of stock pledged by the company in the name of the separate entity.

12. The method of claim 11, wherein the separate entity is a limit liability company.

13. The method of claim 11, further comprising liquidating the shares of stock to generate cash.

14. The method of claim 13, wherein the shares are liquidated periodically according to a liquidation plan.

15. The method of claim 14, wherein the funding is for a term and the separate entity is partially owned by the company during the term, the method further comprising providing full ownership of the separate entity to the company upon satisfaction of funding obligations, thereby providing the company with a funded financing company.

16. The method of claim 11, wherein the funding is for a term and the separate entity is partially owned by the company during the term, the method further comprising providing full ownership of the separate entity to the company upon satisfaction of funding obligations.

17. The method of claim 11, wherein the company receives the funding pursuant to an agreement the method further comprising liquidating the shares of stock upon breach of the agreement.

18. A method of a first party funding a second party, the second party being a publicly traded company, the method comprising:

purchasing accounts receivable of the company at a discount rate;

establishing an entity legally distinct from the company and the first party;

transferring shares of a publicly traded security into the separate entity, the shares being collateral for purchasing the accounts receivable such that the discount rate is greater than an industry comparable discount rate for purchasing the accounts receivable without the shares as collateral.

19. The method of claim 18, wherein the first party is an intermediary.

20. The method of claim 18, wherein the first party is a lender.

21. The method of claim 18, further comprising entering into a tri-lateral contract among the company, the separate entity and the lender governing liquidation of the shares.

22. The method of claim 21, wherein the lender is an intermediary.

23. The method of claim 21, further comprising:

the company breaching the contract;

liquidating the shares in response to the company breaching the contract; and

the first party receiving at least a portion of proceeds from the liquidation of shares.

24. The method of claim 18, wherein funding is provided for a term, the method further comprising:

causing the shares to be liquidated during the term, thereby creating a surplus cash account associated with the separate entity;

collecting on the accounts receivable; and

causing the company to acquire ownership of the separate entity based on lender collecting on the accounts receivable.

25. The method of claim 18, wherein funding is provided for a term the method further comprising:

causing the shares to be liquated during'"'"' the term, thereby crating a surplus cash account associated with the separate entity;

failing to collect on at least a portion of the accounts receivable; and

receiving at least a portion of the surplus cash account based on uncollected accounts receivable.

26. A system for providing funding in an amount, A, to a publicly traded company based on fixed assets and shares of a listed stock via a communications network connecting a lender and a plurality of publicly owned companies seeking to secure financing, the system comprising:

means for receiving an indication of company fixed assets having a value, V, to be pledged as collateral to secure funding and a number, N, of the shares of the listed stock having a price per share, P, to be pledged as additional collateral to secure the funding;

means for determining on advance rate percentage, R, of the pledged fixed assets;

means for determining a ratio, M, of total stock collateral value (N×

P) to excess loan amount (A−

(R×

V)); and

means for transmitting to the company an approval of the funding, where;

$A=\left(R\times <br><br>V\right)+\frac{\left(N\times <br><br>P\right)}{M.}$

27. A method for a company to receive funding, the method comprising:

pledging fixed assets as collateral for the funding, the pledged fixed assets having a standard advance rate associated therewith;

transferring publicly traded stock into a separate entity, the stock separate from the fixed assets; and

receiving funding at an effective advance rate greater than the standard advance rate.

28. The method of claim 27, wherein the effective advance rate is up to about 30% greater than the standard advance rate.

29. The method of claim 27, wherein the stock is liquidated according to a financing plan, the method further comprising:

satisfying finding obligations; and

receiving ownership of the separate entity, the separate entity suitable for use as a financing company.

30. The method of claim 29, further comprising using the separate entity as a funded financing company.

31. A method of receiving funding the method comprising:

selling accounts receivable, the accounts receivable having a standard discount rate associated therewith;

transferring publicly traded stock into a separate entity for liquidation;

receiving funding at an effective discount rate greater than the standard discount rate.

32. The method of claim 31, further comprising agreeing to liquidation of the stock during a period the accounts receivables are not overdue, proceeds from the liquidation to be placed in a surplus cash account.

33. The method of claim 32, wherein a first party provides the funding and further comprising agreeing to provide the first party proceeds of the liquidation in the event at least a portion of the accounts receivable are overdue.

34. The method of claim 32, further comprising receiving proceeds of the liquidation based on collection of the accounts receivables.

35. The method of claim 32, further comprising receiving ownership of the separate entity based on collection of the accounts receivable.