Finance Solutions

Special Situations Financing

Special Situations Financing is typically event-driven: recapitalizations, growth financings, acquisitions, and management buy-outs.

Senior and subordinated debentures, with terms from six months to five years, are secured by the client’s business and its assets (subject to prior interests of any existing senior lenders, in the case of subordinated debentures). As with all our products, Special Situations solutions are structured to limit ownership dilution and allow our client to focus on management and continued growth.

Some Special Situations solutions include bonus features for Crown: special warrants, payment in kind (PIK), phantom equity or gifted shares. These bonus features provide Crown with the ability to participate in the business’ upside in addition to its income from interest payments.

Investment Structure and Terms:

Investment vehicle Senior or subordinated debentures
Overall cost of capital 12% – 20%
Bonus feature Warrants, gifted shares, phantom equity, PIK
Target loan size $5 million to $50 million
Duration 6 months to 5 years
Amortization Flexible
Prepayment cost Low
Company ownership Public & private

Long Term Financing

Successful business owners and operators are often frustrated in their search for long-term financing that does not involve issuing equity. Access to long-term non-dilutive capital allows owners to defer repayment to the point that they can consider it to be permanent capital.

Crown’s Long-term Financing products consist of loans, royalty structures and income streaming with terms of five years or greater. Long-term non-dilutive capital can be structured in a number of forms:

  • Fixed rate long-term loan long-term loan to a business with a defined principal repayment and interest payment.
  • Participating loan long-term loan with principal repayment and interest linked to the performance of a business or project.
  • Perpetual debt secured financing offered to a business with no fixed terms of principal repayment but a defined interest payment.
  • Income streaming secured financing of or direct ownership in assets with either fixed or defined income participation.
  • Royalty interest – secured financing offered to a business with no fixed terms of principal repayment but fixed or defined income participation.

Long-term financing solutions are structured to achieve a consistent cash payment to Crown and typically do not include the additional return-enhancing bonus features that may be present in Special Situations. Long-term financing transactions include medium to high prepayment penalties with limited or no amortization.

Investment Structure and Terms:

Investment vehicle Royalty interest, perpetual debt, term loans, income streaming
Overall cost of capital 10% – 16%
Bonus feature Nil
Target loan size $10 million to $50 million
Duration 5 years to indefinite
Amortization Flexible
Prepayment cost Medium to high
Company ownership Predominantly private