1. Existing shareholders
Before the capital increase in which MyMIcroInvest Finance will participate at the end of the offer, the entrepreneurs of JEKA ENTERTAINMENT jointly hold 100% of the shares of the company while the external investors hold jointly 0% of the shares.
2. Forecasted capital increase
The capital increase to which MyMicroInvest Finance will participate is part of a broader funding of JEKA ENTERTAINMENT considered between 75,000 EUR and 99,900 EUR.
This funding will be allocated as follow :
- Between minimum 75,000 EUR and maximum 99,900 EUR will be subscribed by MyMicroInvest Finance based on the results of the issuing Notes ;
- At incorporation, on the 2nd of June 2017, the entrepreneurs have invested 75,000 EUR. Given that MyMicroInvest Finance has received an option to sell its shares (see further), no co-investor is required.
The value of the company before this increase in capital is presently estimated to be a maximum of 1,000,000 EUR. Following this increase in capital, the value of the company will be between 1,075,000 EUR and 1,099,900 EUR, meaning an estimated valuation of 1,000,000 EUR before increase of capital plus between 75,000 EUR and 99,900 EUR of new money brought in.
The table below indicates the distribution of the shares of the company following this capital increase on the basis of the assumption that MyMicroInvest Finance will subscribe the maximum amount of 99,900 EUR;
The table below presents the percentages of the capital held by the JEKA ENTERTAINMENT account of MyMicroInvest Finance depending on the results of the Notes issue (i.e., a minimum of 75,000 EUR and maximum of 99,900 EUR):
3. Put and call option
It is important to note however that MyMicroInvest Finance and JEKA ENTERTAINMENT have agreed to grant MyMicroInvest Finance a put option allowing it to sell (part of) the shares held by it to either JEKA ENTERTAINMENT.
On the other hand JEKA ENTERTAINMENT and the entrepreneurs Christophe Tassenon and David Derademaecker will be granted a call option whereby they can acquire (part of) the shares held by MyMicroInvest Finance. The two options allow MyMicroInvest Finance an extra opportunity for exit.
These put- and call-options have the following characteristics:
- The call option is exercisable between two and five years following the investment by MyMicroInvest Finance;
- The put-option is exercisable between five and seven years following the investment;
- The yearly internal rate of return for the put-option is 7% and for the call-option it has been fixed at 11%;
- The call option can be exercised by the entrepreneurs Christophe Tassenon and David Derademaecker or the company Jeka Entertainment on the shares of MyMicroInvest Finance, while the put option can be exercised by MyMicroInvest Finance only on the company Jeka Entertainment.
- Both options can be used partially and thus in multiple iterations.
The options with the modalities as mentioned above and all rights connected to it will be guaranteed by the shareholders’ agreement to be drafted in connection with the present capital increase.
As there is a call option that is exercisable between two and five years after the investment by MMIF, this means that there is the risk that the investor may be obliged to repay part of the tax reduction emanating from the Belgian Start-up Tax Shelter to the tax authorities as the shares are not detained for the required four years after investment. We however ensure that the loss of tax advantage will be covered by the internal rate of return as guaranteed by the option. The present table shows the expected return in case of exercise of the put and the call demonstrating how the reimbursement of the tax reduction (tax shelter) can lower this return.
The table here above outlines the cash flows of an investment of 1,000 EUR in the underlying company. A negative cash flow means an investment, while a positive cash flow means a return for the investor. The 'Tax shelter' line includes a negative cash flow for years 2 and 3, as part of the tax benefit needs to be reimbursed if the investment is exited before the fourth anniversary.
Note: the table has been updated to include the impact of MyMicroInvest's performance fee.