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S enior Executives: Managing Risk.
The Challenge
You and your partners launched a company that has recently completed an initial public offering. You have a high concentration of company stock. You are also paying down a substantial loan, the proceeds of which you used to start the company. Consequently, you need to manage your downside risk.
Our Solution
Hawthorn recommends that you engage in a hedging transition with PNC Capital Markets, putting a three-year equity collar on a portion of your shares as they come out of the first stage of lock-up. At the same time, you will use the hedged shares as collateral to refinance your loan at a significant lower interest rate.
Customer Benefit
The equity collar will protect a large percentage of the current value of this portion of stock against a drop in value, while retaining a significant percentage of its upside potential. The reduced loan payments can help improve your cash flow. |
