Structure for generating a source of contingent capital

US7747499B2 · kind B2 · utility

Assignee

• MORGAN STANLEY · US

Inventors

• Nathan McMurtray · New York, US
• Khalid Azim · Rye, US

Key dates

• Filing date: Oct 7, 2004
• Grant date: Jun 29, 2010
• Expiry date: Apr 5, 2029

Classification

• Technology area (CPC G): Physics
• CPC primary: G06Q40/04
• WIPO field: IT methods for management
• WIPO sector: Electrical engineering

Abstract

Embodiments of the present invention are directed to a financing structure for generating a source of contingent capital for a company. According to various embodiments, the company enters into a put option agreement with an entity, such as a trust. The put option agreement permits the company to put preferred stock of the company to the trust. The company also enters into a warrant agreement with the trust. The warrant agreement permits the trust to buy equity securities (such as common stock) of the company or a corporate entity related to the company (e.g., a holding company) from the company. The trust issues to investors bifurcated convertible instruments. The instruments include a fixed income instrument and a warrant to purchase equity securities of the related corporate entity (e.g., the holding company). With the proceeds from the offering, the trust purchases eligible assets, such as low risk government securities which pay fixed or floating periodic interest or dividend payments. The interest rate or dividend rate on the fixed income instrument issued by the trust may match the yield on the eligible assets. The operating company's ability to put its preferred stock to th…