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Samples
To help users better understand the possible effects of negotiating different terms we have created three sample cases. In the Debt+Share royalties there are a number of different factors, which can be negotiated, including; loan interest rate, maturity, amortization payments and col-lateralization. The royalty rates for various periods, the royalty payment period and the contractual compliance terms are al negotiable. Each of the samples can be reviewed in this sample section by clicking on the titles of the samples.
fivemillion - fivemillion is a high tech company having revenues of $5.0 million and seeking to borrow $5.0 million. The company has a good Pre-tax profit margin of 25% due to its proprietary products. The revenues are projected to increase by 20% a year in the first 10 years and then decline to 15% in the next 5 years and be 10% in the last 5 of the 20 years. Assuming the company is able to meet its monthly amortization and 10% interest obligation commitments the IRR of over 20% in the latter years should be attractive to investors.
tenten - tenten is a company having revenues of $20.0 million wishing to have $10.0 million of additional capital. Tenten has a good profit margin and is a steady grower of revnues. The revenues will, the company believes, increase at 10% a year for the next 20 years. The company has an 18% Pre-tax margin and a 10% NAT. Tenten believes they can easily handle annual repayments of $1.0 million as well as the 10% interest on the unpaid balance.
twentyfifty - twentyfifty is family owned business with revenues of $50 million which wishes to borrow $20 million for 8 years with quarterly amortization payments. Assuming a 12% rate of interest was paid plus a 2% royalty on the incremental revenues for four years and then a 1% royalty on the incremental revenues and assuming the Compound Annual Rate of Growth declined from 12% in the first 8 years to 10% in the next 4 years and finally to 8% in the final 8 years the transaction would generate more than a 22% IRR.
Royalty transactions can be as simple or complex as the negating parties agree. Revenue sharing royalties are inherently flexible and can be shaped to meet the needs of both the issuer and the investor.
Please let us have any questions or comments regarding these sample cases, the intent of which is to demonstrate the results of the company’s revenue projections being achieved. If you have any questions or queries, you can contact us at Chairman@REXRoyalties.com
Arthur Lipper, Chairman
British Far East Holdings Ltd.
Chairman@REXRoyalties.com
858 793 7100 – Skype: artlipper
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