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No you get an asset worth x and use it as collateral against the loan valued as x. You'd have to pay interest on the loan, presumably from making a basic invest
by sonnyblarney 8y ago
No you get an asset worth x and use it as collateral against the loan valued as x. You'd have to pay interest on the loan, presumably from making a basic investment. It depends on what the requirements of that 13M are. But if it's just plain 'paid up capital' ... then the company could take the loan, 'owe' 13M, but then 'invest' the money back in the entity they borrowed it from! The regulators may not like this though. Depends.
- sh87 8y agoSo you'd still need an asset worth 13M. What sort of assets are acceptable these days? I ask purely out of curiosity.
- wastedhours 8y agoWouldn't "the bank itself" be the asset worth $13m? In the same buy-out as happens to a lot of sports teams, as long as you have friendly lenders, you can structure the deal to buy the asset, using the asset as the collateral (like a huuuuge car loan). If it's always going to cost $13m to get a bank shell, then (although there might not be many buyers), the bank now has a $13m "thing" which they can take ownership of if it goes down the pan.