Retail Space For Equity

juinjuin

Dear retailpreneurs

Not sure if this is something new to you but it is certainly new to me. I have been thinking of something along this line but I am surprised this organisation is actually implementing it!

A certain major landlord is offering rental free space in exchange for Cumulative Redeemable Convertible Preference Shares.

Rental free means for example out of a $5000 monthly contracted lease, you need NOT for the rental portion say $3500. You still have to pay the balance of $1500 for service charge and A&P.

In lieu of this rental free space, you'll need to issue CRPS @ 4% per annum to this landlord on a regular basis, subject to a cap of 49% of your paid up capital or $500,000 whichever is less.

Cumulative means if you don't pay dividends for 1 year, you still need to pay up the next year, and you must pay CRPS shareholders first before common equity.

Redeemable means that the retailer can buy back those redeemable shares from the landlord to avoid dilution of their shareholding.

Convertible means the landlord has the option of converting the preference shares into common equity

Preference means that common equity shareholders can get paid dividennds only after preference shareholders are paid.

Wondering what you people think. Would you consider joining such a scheme which is a bit akin to venture capital funding?

Regards