Crowdfunding round eight, Wed 14 Sep 2022 🎈

Crowdfunding Freetrade 🙏
185

Honestly, I messaged @adam on this and I really think stating that this is different doesn’t give this CLN the credit it deserves. Without a doubt people need to understand what a CLN is - there is plenty of information available on the crowdcube page and elsewhere - however, the fundamentals are being missed

  1. There is a valuation cap at 400m. Buying the CLN now means that any money raised in the next 12 months - a date Freetrade should confirm, will result in your shares being struck at a max price equivalent to a valuation of 400m.
  2. There is a valuation floor, if also by that date, if no funding is raised. Your CLN will convert to shares at the floor value at 250m, approx £3.77. A heavy discount.
  3. If funding is raised at a valuation of less than £400m, you will receive a 20% discount on the share price.
  4. If Freetrade failed before the conversion or is sold, owning debt will give you priority over shareholders. The amount you get will be dependent on the amount Freetrade is sold for. If failing, I expect selling the Tech stack will likely generate enough money to repay some of the debt. A sale of £50m plus would likely give all debt bearers their money back (someone else can confirm this, maybe @Viktor)
  5. Once the CLN converts, it converts to preference shares giving similar benefits to those mentioned in 4. You will be repaid up to 100% before the other shareholders get any disbursement.
  6. And no, there is no interest being accrued on this CLN. As per 7 - institutions agreed to this too.
  7. The terms of the CLN were struck many months ago by the institutions and Freetrade - so you as an investor need to establish whether the markets are worse or better than then and whether this remains a good deal (I have my opinions, but they are not relevant to others when deciding to invest)
  8. Freetrade would not be able to issue shares currently to the crowd, as this event would automatically trigger the terms of the CLN for the institutions.
  9. If regulatory capital is required in the interim, the CLN would be converted to shares at the floor value - I do not know the order of preference on this conversion events amongst CLN holders. Though some as per Adam’s prior correspondence, already have.

Now I am not an expert and just sharing what I’ve gleaned, but I do believe these points should be front and centre. Simply stating the CLN is different doesn’t even start to explain how this proposal can be considered better than a straight-out share issuance.

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