Restricted and Control Stock Loans

Liquidating large concentrated holdings may not always be the most advantageous alternative for clients.  Significant tax ramifications may result if the stock was acquired at a low cost basis and has appreciated over time.  Clients can leverage these holdings by borrowing against them.  Under qualified circumstances, our clients can pledge their shares as collateral and use the loan proceeds to diversify their portfolios or satisfy other financial needs.  Clients can liquidate funds while maintaining ownership of the securities.  Corporate Executive Services can assist us with the qualification process and the execution of leveraged borrowing against these assets.

Hedging Strategies 

Corporate Executive Services can facilitate participation in hedging strategies on concentrated equity holdings.  In some circumstances, accompanying liquidity solutions, such as cash advances and loans, may also be structured on a hedged position.  Restricted and control securities may also be eligible.  Corporate Executive Services can coordinate participation in the following vehicles.

• Zero Premium Collars – Clients may opt for this combination of a long put and a short call, which offers downside protection and limited upside.
• Variable Prepaid Forwards – Clients may opt to sell some or all of the underlying shares at a future date in exchange for a cash advance in this strategy, which reduces the risk of stock-price depreciation while maintaining stock-price appreciation up to the threshold level.