Structured instrument · illustrative sizing
A principal-protected growth instrument.
A five-year note collateralized 1:1 by U.S. Treasury STRIPS, a 20% warrant, and a policy that can be claimed at any time — one unit, three parts.
Note · face
$41.92mm
Five-year bullet, collateralized 1:1 by UST STRIPS bought at 79.50¢.
Warrant · 20%
Fully diluted
Fully diluted at closing, nominal strike, vests at maturity or on default.
Policy · anytime claim
79.50¢ → 100¢
Claim any fraction of the STRIPS at any time; STRIPS reach par at year 5.
Raise $41.92mm = Note face $41.92mm = STRIPS face $41.92mm
Every dollar advanced is covered by the Note and collateralized at par value at maturity.
Use of each $1.00 lent
Closing proceeds are applied in fixed proportions. Only the growth capital line reaches the Project.
Hover or focus a segment for detail
- STRIPS 79.50¢
- Growth capital · tranche 1 5.96¢
- Growth capital · tranche 2 (escrow) 5.96¢
- Policy premium 5.45¢
- Coupon reserve 2.12¢
- Insurance Company fee 0.50¢
- Custody and administration fee 0.50¢
| Application | Cents / $1.00 | Amount |
|---|---|---|
| UST STRIPS for the Insurance Company cell, executed by the Dealer, held at the Custodian (0.795 → 1.00) | 79.50¢ | $33,329,114 |
| Growth capital — tranche 1, released at closing | 5.96¢ | $2,500,000 |
| Growth capital — tranche 2, milestone escrow at the Custodian | 5.96¢ | $2,500,000 |
| Policy premium — cell tax prefund | 5.45¢ | $2,284,561 |
| Coupon reserve — Lender tax-matching escrow at the Custodian | 2.12¢ | $890,505 |
| Insurance Company upfront fee (0.50%) — policy issuance | 0.50¢ | $209,617 |
| Custody and administration upfront fee (0.50%) — Custodian and Administrator | 0.50¢ | $209,617 |
| Total | 100.00¢ | $41,923,414 |
Illustrative example only; all figures are hypothetical. Not an offer, a solicitation, or tax, legal, insurance, or investment advice.
Three pillars
Principal protection with anytime liquidity
The policy allows a claim on any fraction of the STRIPS at any time — no default, no consent, no sale process. Claims settle in kind: delivered STRIPS satisfy the Note at full maturity value while the Lender realizes accreted value, converging to par at year 5.
Cash-neutral taxation
The stated coupon of $178,101/yr is sized to exactly 21% of each year's interest income, so it pays the tax on itself and on the $3.35mm of OID — which equals the unit allocation to the Warrant ($2.00mm) plus the founding participation ($1.35mm) to the dollar. The Lender is never out of pocket on phantom income.
Uncapped upside that survives default
The 20% warrant vests on repayment, participates in any sale or IPO, and is retained in full even on a maturity default — protection and upside are never mutually exclusive. For investors in the program's first Project the unit also carries a 9% founding participation in the Insurance Company cell of that Project and of every other Project closing in the first two years.
Outcomes at a glance
Modeled outcomes at $5mm net to Project sizing. The FAIL case is the floor, not a loss case.
FAIL
1.00x after-tax (1.02x gross)
IRR 0.425% · CAGR -9.7%
LOW
2.80x
IRR 22.996% · CAGR 50%
BASE
8.63x
IRR 55.969% · CAGR 100%
HIGH
24.29x
IRR 93.612% · CAGR 150%
Illustrative example only; all figures are hypothetical. Not an offer, a solicitation, or tax, legal, insurance, or investment advice. Cash-neutrality assumes a 21% federal corporate rate; state tax, other rates, and AMT/BEAT/CAMT change the required coupon.
Returns shown describe the investment unit itself and are before any advisory fee charged by an investor's own adviser, which is paid by the investor outside the structure.
One instrument, one document