DIGITAL ASSET INVESTMENTS & RECAPITALIZATION

 

FGA DIGITAL ASSET INVESTMENTS

 

What is a digital asset investment?

 

A digital asset investment is one of two things;

 

1)When a digital asset such as a cryptocurrency is purchased for investment purposes
or
2) When an investment is made into a company where a digital asset is utilized with a redemption schedule in place.

 

The latter is what FGA does at times when partnering with a company that has the ability to integrate into its ecosystem, a digital asset that is owned by FGA is utilized with selected viable companies to initially strengthen their balance sheets.

 

When FGA makes an investment into a company using a digital asset as a placeholder it’s a tiered investment, meaning that the digital asset representing the entire investment is placed into an escrow in the company’s name and on the company’s balance sheet as a true asset, which helps to increase the company’s overall value. The second tier is the scheduled redemption of the digital asset into fiat currency (US Dollars or Euros) for working capital purposes. This allows for FGA to incrementally deploy working capital into the company over the course of a predetermined time period as opposed to all at once, while allowing the company to strengthen their balance sheet in the meanwhile.
FGA utilizes a digital asset network that allows FGA to implement the redemption schedule with specific escrow release dates attached to them. This has proven to be the most effective, secure and transparent path for such transactions.

 

The range is from US$1,000,000 to US$50,000,000 depending on the company, their value and needs.

 

The steps are pretty simple and as follows:

 

1. FGA receives the business plan or executive summary, website and other due diligence material to determine if the firm can be an asset to that company’s growth organically via our subsidiaries and strategic partnerships.
2. Once its determined that FGA can be an asset to that company then the firm evaluates the company as a whole, its industry, business plan or executive summary to determine the level of participation by FGA.
3. Agreements are issued, liquidation/redemption schedule is agreed to in writing, digital assets are deployed in escrow and financial statements are updated.
4. Execution of the growth plan begins.

 

FGA works very closely with the companies invested in so that the firm can assist them in building a strong foundation and executing on their growth initiatives while getting expert guidance along the way.

 

Through our subsidiaries and other business relationships, FGA has the ability to assist in growing the companies we invest in organically and become an asset with their capital raising endeavors via our relationships.

 

FGA is focused on companies that can integrate into the firms ecosystem with a preference for companies in the technology sector such as smart technology, artificial intelligence, machine learning and cybersecurity but also entertain companies in the aerospace, aviation and automotive arenas.

 

RECAPITALIZATION

 

What is a Recapitalization?

 

A recapitalization is a change in a company’s capital structure, plain and simple. Recapitalization is often undertaken with the goal of making the company’s capital structure more stable, and sometimes to boost the company’s stock price, this can be done by issuing bonds or buying back stock. Companies that do not want to become hostile takeover targets may take steps to recapitalize by taking on a very large amount of debt, and issuing substantial dividends to their shareholders of their company. Now bankrupt companies usually need to recapitalize as a part of their reorganization plan that is set in place.
FGA can be an asset to companies that are seeking to recapitalize and that can be done via a digital asset investment.

 

What is Leverage Recapitalization?

 

In the corporate world, a leveraged recapitalization is a strategy that is used to ward off a hostile takeover. This is when a company incurs a significant amount of additional debt to repurchase stocks through a buyback program or distribute large dividends to their shareholders. The additional debt may cause the stock price to drop and make it less attractive to potential corporate raiders.

 

This is a form of a poison pill and does a couple of things, first it brings the amount of debt so high that the takeover price goes up right along with it and could act as a deterrent and it keeps the shareholder interest in tack in a hostile takeover situation.

 

Now leveraged recapitalizations are not only for publicly traded companies, this strategy is also used by privately held companies as a way of refinancing, generally to provide returns to the shareholders while not selling the company outright. These types of recapitalizations can be just minor adjustments to the capital structure or could also involve a change of control.
Although leveraged recapitalization is different in nature, FGA still has the ability to work with companies via digital assets as the companies can lever their companies as well as work towards the liquidation of the digital asset over time. This carries a yield that goes to FGA with a repayment schedule such as a high yielding bond would have but no equity is taken by FGA. It’s a pure debt vehicle for situations such as a leveraged recapitalization effort.

 

Contact us at 646.397.0588 or via email at info@fgapartners.com

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