Overview

Our fund seeks to purchase a significant amount of shares at an arranged price with the seller of the security – generally known as a “Block Trade”. A purchase of securities totaling $500,000 could be considered a Block Trade; however, in practice block trades are significantly larger in transaction size as major shareholders, institutional investors and hedge funds seek liquidity from equity and debt securities they own.

Transaction Procedure

Block Trades are negotiated apart from the public auction market. Depending on the number of shares, the transaction can be completed in one or more tranches. The share price and investment tranche is usually negotiated at a discount to the current market price. Once price and investment size is negotiated and agreed by Majestic Dragon and the selling shareholder, the transaction is rapidly concluded via delivery versus payment trading process. Funds are immediately received into the selling shareholder’s brokerage account.

Transaction Timing

Block Trades are the most expedient form of liquidity transactions in which we participate. The transaction can be negotiated and executed within 24 hours, although the typical transaction timing is between 2-3 business days.

Overview

Our Fund offers shareholders, officers, institutional investors, private equity funds and hedge funds an innovative funding alternative to achieve liquidity on single share or portfolio positions. We provide margin financing, generally known as “Stock Loans”, which are interest only and non-recourse, the borrower has the option of walking away at any time with no obligation or liability to re-pay the loan principal or interest. Loan proceeds can be used for personal or business purposes or to diversify or hedge current stock positions. We fund loans from USD1,000,000 to USD200,000,000 and offer the most competitive lending terms in the industry.

Transaction Procedure

1. Borrower submits loan request form to Majestic Dragon and provides the stock symbol or code of the prospective loan collateral and the desired loan amount.
2. Majestic Dragon determines viability of the loan and calculates a Loan-to-Value ratio (LTV) and fixed interest rate based on risk assessment. Majestic Dragon subsequently issues a funding term sheet to borrower.
3. Loan terms are negotiated and finalized.
4. Majestic Dragon prepares loan documents to borrower for review.
5. Loan documents are finalized and executed.
6. Borrower completes pledged collateral delivery.
7. Loan is funded.

Transaction Timing

The time required to complete a loan transaction is dependent on the turnaround of loan documents and negotiations. If prospective borrowers are diligent with the loan document process, a loan can be funded in as little as 3 days. But typically a loan requires 7-10 business days to complete. If time is of the essence, we invite our customers to come to our offices to help expedite the loan document and funding process..

Transaction Advantages

• Non–recourse loan vs. traditional bank recourse financing
• Highest LTV rates in the industry
• Low interest rates and interest only terms
• No upfront fees or expenses
• Quick funding settlement
• Private and confidential
• Potential income tax advantages

Our Fund seeks to make late stage investments in the debt and equities of companies very near to completing an initial public offering in the capital markets. Such investment is typically referred to as a pre-IPO investment. Proceeds from the pre-IPO investment can be used for numerous corporate purposes. We can either invest independently or arrange a syndication of investors for the pre-IPO investment. Investment sizes range from USD3,000,000 up to USD50,000,000. Each investment opportunity is reviewed on a case-by-case basis and funded following the execution of a subscription agreement with the target issuer.

Our fund seeks to subscribe to convertible debt instruments provided by publicly held issuers. We evaluate each convertible debenture on a case-by-case basis. Our Fund’s due diligence process is swift and funding can occur as quickly as 10 business days from receipt of the convertible loan documents. Investment size can range from USD3,000,000 up to USD50,000,000.

Our Fund seeks to invest in equity lines of credit of publicly held issuers. The equity credit line allows companies to issue equity and receive funding on a staggered basis at their discretion and timing. Typically this funding product is structured similar to a Fixed Private Placement product whereby we agree to buy the equity of publicly held issuers at an agreed discount to the current market price. The term of the Equity Line of Credit is effective for up to 3 years and can be a very expedient way for companies to meet near term funding and working capital requirements. We can issue equity lines of credit in amounts up to USD50,000,000.