Silicon Valley Bank proposed the following key loan terms: $1.5 million at prime + .75%. - Bridge
Question:
Silicon Valley Bank proposed the following key loan terms:
$1.5 million at prime + .75%.
-
Bridge loan converting to revolving accounts receivable line of credit upon
raising new equity.
-
First priority lien on corporate accounts receivable, inventory, and specific
equipment (cross-collateralized with $500,000 equipment line of credit).
-
Warrants to purchase $45,000 worth of preferred stock at the most recent
round's pricing (new round if completed; last round if not).
-
Minimum of $5 million of new equity by 1/31/98 otherwise Xedia will be in
violation of covenant terms.
From the perspective of SVB what other deal could be suggested in the Xedia and SVB case. Determine and justify an appropriate deal structure including material business terms such as interest rate and warrant coverage
Expert Answer:
From the given information it is clear that Silicon Valley Bank SVB has proposed a loan to Xedia To suggest an alternative deal structure we need to c... View the full answer
