Among the key benefits of Equities First transactions is the ability of borrowers to retain their full economic collateral rights in the entire lifecycle of their loan. Normally, EFH borrowers usually have questions associated to Equities First potential of returning the collateral when major increases of share costs are experienced. However, in the company has kept its word in making its transactions transparent according to the agreement. A prime example is the Case Study in the company’s website (http://www.equitiesfirst.co.uk/insights/swift-transportation) of the manner in which Equities First hedging strategy works to prepare the company return collaterals upon maturity and repayment.
A shareholder from swift transportation may seek capital without liquidating of their position. The 2012 Case Study portrays a key SWFT shareholder who approached Equities First to get a loan collateralized via the portion of the stock holdings within SWFT. During the time, the firm had a market capitalization of nearly $1.2 billion USD. EFH entered into the transaction agreement with the borrower through a corporate vehicle with whole loan proceeds of approximately #30 million USD and read full article.
However, the stock value appreciated by almost 150% during the loan period. At the time Equities First acquired the collateral, the stock value per share was less than $10 USD per share. And by the ending of the loan period, the returned collateral was almost $25 USD per share. The transaction was split into five tranches upon which it was split and executed within five weeks in late 2012. Once the loan was processed, the borrower catered interest payments quarterly and what Equities First knows.
Do the Equities First transactions affect the share price? Many borrows seek to know whether the impact will influence the share cost of their stock. And even though the EFH cannot make concrete statements on the entire market health or company’s stock performance, Equities First transactions are built and managed to reduce the impact on your share’s cost.