Bond Program

Lauton & Foxton Capital Partners
Presents

Bond Programs To
Finance Your Project

1370 Broadway, Suite 564
New York, NY 10018
Phone: 646 380 1989
Email: info@lautonfoxtoncapital.com
Web: www.lautonfoxtoncapital.com November 2011

What is a bond?
All bonds are debt securities issued by organizations to
raise capital for various purposes. When you buy a bond,
you lend your money to the entity that issues it. In return
for the loan of your funds, the issuer agrees to pay you
interest and ultimately to return the face value (principal)
when the bond matures or is called, at a specified date in
the future known as the “maturity date” or “call date.”

Contact us at info@lautonfoxtoncapital.com or www.lautonfoxtoncapital.com/submit_project

Types of Bonds
As it relates to project finance, there are various types of
bonds that can be used to procure capital for your
energy, real estate, infrastructure or development
project:

 Corporate Bonds
 Industrial Bonds (Revenue and General)
 Municipal Bonds

This presentation will focus on Corporate Bonds.

Contact us at info@lautonfoxtoncapital.com or www.lautonfoxtoncapital/submit_project

Corporate Bonds
Corporate bonds are debts issued by industrial, financial and
service companies to finance capital investment and
operating cash flow.

The backing for the bond is usually the payment ability of the
company, which is typically money to be earned from future
operations. In some cases, the company's physical assets may
be used as collateral for bonds.


Using Corporate Bonds to Finance Your Project
Advantages

 Taking on debt by issuing bonds is usually cheaper than either a bank
overdraft or the cost of raising equity through a share issue. A major
advantage is that the return on debt (interest) is tax-deductible, whereas
the return on equity (dividends) is paid out of a company’s profits, which
are taxed before dividend payments can be made to stockholders.

 Bonds offer a more secure return for investors—dividends are paid out
purely at the discretion of the company, whereas interest on debt must be
paid according to the set terms of the bond.

 Financing through debt can be very useful for companies that do not want
to relinquish control to others. Creditors have no influence on the board or
company policy—unlike stockholders.


Disadvantages
 The risks for bondholders rise as more debt is issued.

 The debt covenants may prove too restrictive for the company. A
company that is highly leveraged is more likely to face cash flow
difficulties as it has to meet the coupon payments regardless of its
income.

 If the company is publicly listed on a stock exchange, the risk to
stockholders increases when debt is issued. This is due to the increased
claims of the creditors, or bondholders, on the company’s capital and
earnings, which must be used to service the debt before anything else.
Bond holders are paid AFTER creditors.


What you need to know:

 An investment banker serves as an intermediary between the
organization issuing the securities and the investors purchasing them.

 The underwriter, may or may not be the investment bank issuing the
bonds. When an investment banks underwrites the bonds, they assume
the risk of buying the bonds and reselling them to the public or other
dealers. When an investment banks does not underwrite the bonds,
they are working in a sales agent capacity to market the bonds on a best
efforts basis.

 The investment house is also responsible for filing all of the necessary
forms with the SEC, setting the price for the bonds and taking the
leading in bringing the bonds to market.


What you need to know (con’t)

 Corporate bonds are usually sold in issuances of $1,000.

 The investment bank earns a profit on the difference between the purchase
price of the bond and the selling price of the bond. This is called the yield
spread or underwriting spread. The riskier a bond, the larger the spread.

 If bonds are purchased for investment and NOT resale, they do NOT have
to be registered with the SEC. These types are bonds are commonly
referred to as letter bonds, or a letter of security.

 A bond's risk level, or the risk that the bond issuer will default on
payments to bondholders, is measured by bond rating agencies. Several
companies rate credit, but Standard & Poor's and Moody's are the two
largest.


Timelines for Bond Procurement
 Analysis of financial alternatives Weeks 0-4
 Preparation of legal documents Weeks 1-17
 Preparation of disclosure documents Weeks 2-20
 Forecasts of costs and revenues Weeks 4-20
 Bond Ratings Weeks 20-23
 Bond Marketing Weeks 21-24
 Bond Closing and Receipt of Funds Weeks 23-26

Contact us at info@lautonfoxtoncapital.com or www.lautonfoxtoncapital.com/submit_project

Submit your project

We have several investment houses that will work with
you to utilize bonds to finance your project.

Please contact us for a no obligation review of your
project to determine if bond financing will work for you.

 Phone: 646 380 1989
 Email: info@lautonfoxtoncapital.com
 Web: www.lautonfoxtoncapital.com


Bond Program

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