Presentation Transcript

1. Small-Cap Secured Lending & Advisory Specialists Presentation to Hall Chadwick, Sydney. April 17th, 2014 April, 2014
2. Overview TCA Global Credit Master Fund TCA is a short-duration, absolute return fund specializing in senior secured lending and advisory services to small-caps located predominantly in the US, Canada, Western Europe & Australia. Fund commenced April 2010, 3 Years of Unqualified Audited financial statements TCA has Funds under Management of circa USD 180 million, target circa USD 400 million. Regulated and registered by the SEC (US), FCA/FSA (UK), and ASIC (Australia). AFSL No.257871 Focused Strategy Origination of $10-25MM quarterly; multiple financings consummated monthly Small position sizes, 1-2% of portfolio; Average loan size $1-2MM Loans are ALWAYS senior secured, short duration (6 to 12 months) & income generating Targeted annual net returns to Investors of 12-14% No style drift, no leverage, no shorting, no market risk, no currency risk Long-term Track Record Returns have eclipsed the 12-14% target since inception, while exhibiting low volatility when compared with equities (S&P 500 Index) or high-yield debt (ML High Yield Master II Index). Specialty Global Team Extensive expertise in credit analysis and monitoring, stable & seasoned executive team In-depth restructuring, liquidation and bankruptcy experience; leads to proactive adaptation Quarterly independent collateral validation Independent board of directors, administrators, legal counsel & auditors CIMA & SEC* regulated and AIMA best practices membership *Pre-approved to be finalized in June 2014 Confidential. Do not copy or distribute.
3. Market Inefficiency in Small-Cap Lending Secular Decline of ‘Traditional’ Financing Sources 15+ years of banks drastically reducing exposure to small-cap lending % 100 75 50 25 0 -25 -50 -75 Tightening Standards Stronger Demand 2005 2006 2007 2008 2009 2010 2011 2012 2013 Note: Change in percentage from the previous period. Source: Federal Reserve Board, Senior Loan Officer Survey, 2013 Confidential. Do not copy or distribute.
4. Return Attribution IRR* Expenses ROI** 12-14% Fund expenses: 2/20, High Watermark Loan Loss Experience Cash reserve drag Loan Interest and Collection Capital Fee Equity Kicker Merchant Banking & Advisory Fee *targeted, typical fund investment **per annum, targeted, net to Investors Confidential. Do not copy or distribute.
5. Thorough Investment Process Fundamental, Credit, Liquidity, Fund & Market Dynamics Excellent relationships with investee companies; 50% repeat business In-house expertise for work-outs when needed 2 4 3 1 Investment Review Establish most efficient investment structure and terms/pipeline On Site Visits to Portfolio Companies Unanimous Investment Committee Approval only Legal Due Diligence Local legal experts evaluate and structure deal Standardized legal documents / jurisdiction expedite process Deal Origination Investment professionals and Analyst Team Global network of professional advisors Sponsor and attend conferences 50% repeat business Deal Analysis Fundamental, credit and liquidity analysis Management team +20yr track record Corporate structure Evaluate investment risks/reward 7 6 5 Investment Committee CIO led Deal size and duration vis-à-vis portfolio capacity Monitor cash flow to deal flow Accept/modify/reject terms Monitoring to Repayment Bi-weekly call with management to monitor evolution of investments Identify and act on any stressed position Monthly report to Investment Committee on stressed positions, actions taken and resolutions (External Director led) Completion of payment Transaction Close Documents executed Investment executed Lock-box account opened Analyst Team assigned to monitor Confidential. Do not copy or distribute.
6. TCA Credentials Specialty Global Team TCA Fund strategy: investing in short term, senior secured debt in listed and non listed small cap companies Stable Executive Team; Dozens of Corporate References Successful track record with a high repeat business rate Debt Profile Transaction size: $0.5MM to $5MM Secured lending structures Efficient Execution Term sheets issued within 24hrs of management call and collation of preliminary due diligence material Closing typically within 2 weeks after term sheet signing and due diligence is complete Confidential. Do not copy or distribute.
7. Industry and Geographical Breakdown Confidential. Do not copy or distribute.
8. ProvenManagementTeams Revenue Collateral StrongCorporate Governance Investment Criteria Robust management teams that have a track record of success Identifiable revenues streams (not start up companies) Strong Cash Flows, receivables and contracted revenues Listed companies, private companies seeking an IPO, Private Companies whose internal reporting procedures match those of a listed company Confidential. Do not copy or distribute.
9. Investment Structures TCA has three main financing instruments*: Amortizing Notes Revolving Credit Facilities Convertible and Invoice-backed Notes In addition, Equity Lines and Swaps are available in conjunction with a debt piece *Transactions are always senior secured and collateral based Confidential. Do not copy or distribute.
10. Amortizing Notes 12 month term Monthly equal amortisation payments plus interest First charge over assets and in particular over liquid collateral: Cash flows Receivables (subject to counter-party credit worthiness and concentration risk) Contracted revenues (subject to counter-party credit worthiness) Possibly in conjunction with an equity line (issuer must still have some proven cash flow to service the note in the absence of equity draw downs) Coupon 8% - 12% depending on credit profile Redemption Premium Investment Banking Fee payable in shares in certain instances Legal and due diligence costs paid by issuer On going reporting obligations Confidential. Do not copy or distribute.
11. Revolving Facility Overview Renewable term of 6 months (Renewed with mutual consent) Lend up to 80% of value of liquid collateral First charge over collateral and “lock box” bank arrangement Lock Box Lock Box swept weekly or bi-weekly Similar costs to Amortizing Loan Note but additional for operation of Lock Box Reserve Reserve account deduction of 20% of cash flow up to 20% of the facility Reserve account used for repayment Customer cash receipts Lock Box Bank Account 20% Reserve Account deduction For Customer payments Customized Periods for Reconciliations TCA signatories Confidential to customers Interest and fees Balance of 80% remitted to company’s operational account Confidential. Do not copy or distribute.
12. Investment Process Week One Pre-Screening and initial due diligence of the company Review 12 month historic numbers and 12 month forecast Analysis of the companies Account Receivables and Account payables In depth analysis of company’s use of proceeds Conference call with the management team Term Sheet issued Term sheet is discussed and an agreement is formed Legal and due diligence costs are paid Unanimous investment committee approval must be made Week Two Legal documents prepared Legal documents are agreed upon by both the parties Detailed Due diligence Closing the deal; funds are remitted to the company Term Post Closing Repayment of principal and interest Monthly reporting Repayment at end of term or rollover Confidential. Do not copy or distribute.
13. Case Studies Case One U.S Energy Provider Case Two US Medical and Medical Supplies Company Company Overview: The Company is publically listed on the Canadian TSX Venture Exchange and a US based Company that focuses on the acquisition, development and exploration of oil and natural gas. The Company has operated for nearly ten years and has a great relationship with a large oil and gas company. The Company is focused on the execution and expansion of its drilling program in its existing holdings. $3MM Senior secured short term lending facility To assist with the drilling of proved reserves and working capital needs, the Company sought out TCA for a financing solution. TCA’s solution was to support the Company’s expansion with a short duration senior secured debenture secured by all assets and receivables of the Company. Company Overview: The Company is publicly listed and a US based Company that provides laboratory services specializing in providing blood and urine drug toxicology to physicians, clinics and rehabilitation facilities in the United States. The Company intends to grow from the acquisition and formation of businesses that can grow be expanded to provide an extensive range of services to Medical Providers for the improved care of a patient. $4MM Revolving line of credit facility: To assist with the active expansion and working capital needs, the Company contacted TCA for a financing solution. TCA’s offered a financial solution to the Company with a senior secured revolving line of credit secured by all assets and eligible medical receivables of the Company. Confidential. Do not copy or distribute.
14. Case Studies Case Three U.S Multimedia Networking Company Case Four US Medical and Medical Supplies Company Company Overview: The Company is a US based private full service multimedia marketing and professional networking company that assists individuals and small companies to promote their professional identity. The company utilizes a membership platform, radio and video interviews, web site development, press releases, an online edition of a Who’s Who, and other multimedia methods to promote the businesses and professional identities of its members and customers. The Company’s mission is to assist the world’s professional and notable people to make them more productive and successful in a cost effective way. $2MM Asset Based Line of Credit: To support the marketing strategies and working capital needs of the company, TCA was sought out for a financing solution. TCA devised a solution that would best support the Company through an asset based line of credit secured by the credit card receivables of the Company. Company Overview: The Company is publicly listed and a US based Company that provides laboratory services specializing in providing blood and urine drug toxicology to physicians, clinics and rehabilitation facilities in the United States. The Company intends to grow from the acquisition and formation of businesses that can grow be expanded to provide an extensive range of services to Medical Providers for the improved care of a patient. $4MM Revolving line of credit facility: To assist with the active expansion and working capital needs, the Company contacted TCA for a financing solution. TCA’s offered a financial solution to the Company with a senior secured revolving line of credit secured by all assets and eligible medical receivables of the Company. Confidential. Do not copy or distribute.
15. Case Studies Case Five US Aviation Services Company Case Six US Food Products Company Company Overview: The Company is a private full service mid-sized air charter based in the US. The Company operates as a provider of private aviation services through two primary flight services: (1) on demand/pay as you go; and (2) bulk purchasing/advanced block hour purchasing with funds on account. These services are provided on the Company’s managed aircraft fleet by professionally piloted aircraft for business and personal use. The Company intends to grow its business segments and bring in-house those services that the Company believes to be synergistic to the air charter business. $5MM Secured Line of Credit Facility: To assist with the business growth plan and working capital needs, the Company contacted TCA for a financing solution. TCA’s resolution was to support the Company with a senior secured line of credit facility secured by all assets and credit card receivables of the Company. Company Overview: The Company is a public US based Company that provides sustainably, grown, ethically farmed and artisan roasted gourmet coffee through multiple US and international distribution channels. The Company is looking to expand its US sales territories and to develop a significant global recognition through co-branding relationships. $2MM Secured revolving credit facility: To assist with the expansion and working capital needs, the Company contacted TCA for a financing solution. TCA offered a solution to the Company with a senior secured line of credit with a convertible debenture secured by all assets and receivables of the Company. Confidential. Do not copy or distribute.
16. Case Studies Case Seven US Gourmet Bakery & Café Products Company Company Overview: The US based and publicly listed Company engages in the development, production, and marketing of desserts to retail, corporate, and wholesale markets in the United States. The Company provides various pies, including apple, peach, cherry, blackberry, blueberry, pecan, buttermilk, chocolate pecan, lemon velvet, coconut supreme, heavenly chocolate, and key lime margarita, as well as offers seasonal pies, such as pumpkin pie. The Company markets its products directly to consumers through its Web site, phone orders, in-store sales, and festivals/events, as well as through foodservice distributors and a foodservice broker. As of June 27, 2012, the Company owned and operated seven cafes in Texas. The Company’s focus is on opening additional Company-owned Cafes. $1MM Secured convertible debenture: To assist with the storefront expansion and working capital needs, the Company contacted TCA for a financing solution. TCA’s resolution was to support the Company with a senior secured convertible debenture secured by all assets and receivables of the Company. Confidential. Do not copy or distribute.
17. Some alternatives to TCA funding Equity… still very scarce, and invariably owners believe it is too dilutive, expensive and permanent. Bank Debt… scarce, avoided by prudential and balance sheet constraints. Alternative/Mezzanine, tends to be scarce, onerous, and carry equity (dilutive) trails. So, typically TCA appeals as: It favours growing, higher margin businesses. It is capable of being re-paid/re-financed once growth has delivered returns It can be flexible/adaptive It is a short and reasonably predictable process and outcome TCA tends to understand these SMEs – we currently have over circa 60% repeat business If the business foregoes the opportunity, there tends to be an “opportunity cost/gross profit” foregone. Confidential. Do not copy or distribute.
18. SnapshotTCA Alpha Driven-Absolute Return Fund No lockup, monthly liquidity Non-correlated to all other asset classes Low volatility return profile Targeted net returns of 12-14% per annum Quarterly Income distribution available No leverage, no shorting, minimal currency risk 3 Years of Unqualified Audited financial statements Regulated and registered by CIMA, SEC* ; AIMA best practices membership Independent board of Directors Quarterly reviews byIndependent forensic accounting firm Hedged share classes for global investors (GBP, USD, EUR) Expert Management Team *Pre-approved to be finalized in June 2014 Confidential. Do not copy or distribute.
19. Expert Management Team Founder: Bob Press Bob Press’s career spans over two decades in finance. He began his career in the Capital Markets Group of Chemical Bank and rose to become the head of global derivative products trading. He has been a principal in asset management, brokerage and investment banking companies and has served on industry panels and as an officer and director of public and private companies. His diverse background includes years of experience in structured finance, asset backed lending, securitizations and mergers and acquisitions both within the US and Europe. Prior to the formation of TCA Fund Management Group, Bob was co-founder and portfolio manager of Montgomery Equity Partners L.P., a sponsored fund. Bob has a BA in Economics with extensive coursework in computer science from Brandeis University, Massachusetts. Prior to the formation of TCA Fund Management Group, Bob was the co-founder of a sponsored fund and then an independent fund. Director: Bruce Wookey Mr. Wookey has over 25 years experience in corporate finance with a focus on strategic advisory, mergers, and acquisitions, equity portfolios structuring and all facets of capital raisings. Mr. Bruce Wookey began his career as a Chartered Accountant with PWC, and has continued to be involved professionally at the top level, as a founding member of the Urgent Issues Group, and continuing as a Fellow of the Institute of Chartered Accountants in Australia. Bruce was a member of The Australian Stock Exchange, is a Fellow of the Australian Institute of Company Directors and The Financial Services Institute of Australia (FINSIA). He has also been involved in global Corporate Finance, Advisory and Syndications and as Head of Corporate Finance of The Hong Kong and Shanghai Bank in Australia. In addition to serving as a director TCA Global Master Credit fund and its feeder funds, he also serves as the current managing director and major shareholder of Cartesian Capital Group which he founded in 2001. Bruce has a Degree in Business Studies (Accounting) (FIT), a post graduate diploma in Banking & Finance (FINSIA), and an MBA from The University of Melbourne. Confidential. Do not copy or distribute.
20. Expert Management Team Managing Director & Portfolio Manager: Donna Silverman Prior to joining TCA, Donna Silverman’s investment banking career began by founding her own firm and then merging her efforts into another successful boutique investment banking firm as a partner. She is a specialist in raising capital and working with small to mid-size private and public companies with a global perspective. She currently provides valuable entrée and understanding of markets both within and outside the United States and that global perspective is in keeping with the ever increasing multi-country needs of corporate issuers. She has been a director of both private and public companies in the United States. Ms. Silverman also focuses on the continuing development of resources for TCA fund, specializing in the introduction of the Fund to US Broker Dealers and liaising with both management and registered representatives. Ms. Silverman holds a BS in Psychology from Rowan University. Confidential. Do not copy or distribute.
21. Platforms & SIPP Providers Confidential. Do not copy or distribute. As of March 2014
22. Contacts Confidential. Do not copy or distribute.
23. Disclaimer General This document is being furnished by TCA Fund Management Group (“TCA”) the investment manager of TCA Global Credit Master Fund LP (the "Fund") solely for use in connection with consideration of an investment in the Fund by prospective investors. The information contained herein regarding TCA is confidential and proprietary and intended only for use by the recipient. This document may not be reproduced or copied without the prior written consent of TCA.  This document is subject to revision at any time and the Manager is not obligated to inform you of any changes made.  The information contained herein is not complete, and does not contain certain material information about alternative investments, including important disclosures and risk factors associated with an investment these types of vehicles, and is subject to change without notice. This document is not intended to be, nor should it be construed or used as an offer to sell, or a solicitation of any offer to buy shares or limited partnership interests any funds managed by TCA If any offer is made, it shall be pursuant to a definitive Private Placement Memorandum prepared by or on behalf of a specific fund which contains detailed information concerning the investment terms and the risks, fees and expenses associated with an investment in that fund. Neither the Securities and Exchange Commission (“SEC”) nor any state securities administrator has approved or disapproved, passed on, or endorsed, the merits of these securities. The Manager does not accept any responsibility or liability whatsoever caused by any action taken in reliance upon information herein.  TCA is regulated by such regulatory agencies as the SEC and the Financial Conduct Authority (“FCA”) and abides by all standards and legal requirements required for an investment adviser in all jurisdictions. TCA’s interests will be offered and sold only to "Accredited Investors" as such terms are defined under federal securities laws. Prospective investors should inform themselves and take appropriate advice as to any applicable legal requirements and any applicable taxation and exchange control regulations in the countries of their citizenship, residence or domicile which might be relevant to the subscription, purchase, holding, exchange, redemption or disposal of any investments. No statement herein supersedes any statement to the contrary in the Fund's confidential offering memorandum. With respect to the present document and/or its accessories, the Manager makes no warranty or representation, whether express or implied, and assumes no legal liability for the accuracy, completeness or usefulness of any information disclosed. In addition to exposure to adverse market conditions, investments may also be exposed to changes in regulations, change in providers of capital and other service providers. Confidential. Do not copy or distribute.
24. Disclaimer Performance The performance information herein has been prepared by or on behalf of TCA and has not been independently audited or verified except for certain year-end data. Investment returns may vary from the stated objectives so that investors may have a gain or a loss when they redeem their investment. As with any investment vehicle, past performance cannot assure any level of future results. Returns (which may include the reinvestment of dividends, capital gains and other earnings) are shown net of all fees and expenses. The results reflected in any performance information are not necessarily indicative of future results. Investments in a Fund entail numerous risks including the loss of capital. Current year returns may be subject to adjustment during the year-end audit.  This information may include "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 (the "Reform Act"). TCA claims the protection of the safe-harbor for forward-looking statements contained in the Reform Act. These forward-looking statements are often characterized by the terms "may," "believes," "projects," "expects," or "anticipates," and do not reflect historical facts.  Specific forward-looking statements could be in reference/ implication, but not limited to/of: impact of the company's expansion plan, and new business development success, future financial results, development and acquisition of new product lines, the impact of competitive products or pricing from technological changes, the effect of economic conditions and other uncertainties. The information contained herein does not constitute an offer to sell or the solicitation of an offer to purchase any security or investment product.  Any such offer may only be made by means of delivery of an approved confidential offering memorandum and only in those jurisdictions where permitted by law.   There is no guarantee that the investment objectives of the Fund will be achieved. The performance representations contained herein are not representations that such performance will continue in the future. There may be sharp differences between prior performance results; such performance should not be construed as an indicator of future performance. Performance information and/or results, unless otherwise indicated, are un-audited and their appearance reflects the estimated returns net of all expenses, including the management and performance fees similar to those of the Fund. The information contained herein does not take into account the particular investment objectives or financial circumstances of any specific person who may receive it.  Before making an investment, prospective investors are advised to carefully review the offering memorandum with their advisers to determine whether investing in the Fund is suitable. An investment in the Fund is speculative and involves a high degree of risk.  Opportunities for withdrawal and transferability of interests can be restrictive. As a result, investors may not have access to capital except according to the terms of withdrawal specified within the confidential offering memorandum and other related documents. Confidential. Do not copy or distribute.
25. Disclaimer Alternative Investment Risks Investments in alternative investments entail substantial risk and are not intended as a complete investment program. The profitability and return of alternative investments are dependent upon numerous factors, including the active management of TCA’s portfolio, as well as general macroeconomic variables such as interest rates and the foreign exchange markets. There is no secondary market for interests in many alternative investments and none is expected to develop. Alternative investments are designed only for sophisticated investors who are able to bear the economic risk of losing all of their investment. Alternative investments: (1) often engage in leveraging and other speculative investment practices that may increase the risk of investment loss; (2) can be highly illiquid; (3) are not required to provide periodic pricing or valuation information to investors; (4) may involve complex tax structures and delays in distributing important tax information; (5) are not subject to the same regulatory requirements as mutual funds; and (6) often charge high fees. Current Information Opinions expressed are current opinions as of the date appearing in this material only. While the data contained herein has been prepared from information that TCA believes to be reliable, TCA does not warrant the accuracy or completeness of such information. Use of Indexes Market index information shown herein is included to show relative market performance for the periods indicated and not as standards of comparison, since these are unmanaged, broadly based indices which differ in numerous respects from the portfolio composition of the Fund. Market index information was compiled from sources that TCA believes to be reliable. No representation or guarantee is made hereby with respect to the accuracy or completeness of such data. Index Definitions The S&P 500 Stock Index is an unmanaged market capitalization index of 500 US equities generally considered to be representative of US stock market activity. The Merrill Lynch High Yield Master II is an unmanaged benchmark index generally considered as a measure of the broad high yield market. Confidential. Do not copy or distribute.