Illustrative sizing · $5MM net to Project

Lifecycle: Closing → Term → Claim → Maturity

Four stages, each with fixed mechanics. Nothing in the structure depends on negotiation after closing.

1 · At closing — funds flow

Lender

Advances $43.11mm against one unit — note, warrant, and policy.

81.50¢

STRIPS / SEG account

$35,132,426

UST STRIPS bought at 81.50¢, face $43.11mm, accreting $7.97mm to par at year 5.At closing the cell grants options on its equity — Project 34% · Broker 10% · Dealer 5% — exercisable yr 5, only on full repayment.

4.92¢

Insurance Company cell (premium)

$2,119,896

Policy premium — cell tax prefund.

1.23¢

Coupon reserve escrow

$531,645

Funds all five stated coupons; held outside the Project.

0.50¢

Broker fee

$215,536

0.25¢

Dealer fee

$107,768

11.60¢

Growth capital to the Project

$5,000,000

The only proceeds that reach the Project.

No portion of the other $38.11mm is ever paid to, held by, or property of the Project — nothing outside the $5.00mm advance for a trustee to avoid.

2 · During the term

The coupon

$106,329/yr paid from escrow to the Lender — exactly 21% of each year's interest income. The Project pays nothing during the term; the reserve was funded at closing.

The policy

Claim any portion at any time → principal back pro tanto. A claim cancels the same fraction of warrant coverage and of the remaining coupons; matching unused reserve and unearned premium return to the Lender.

3 · Partial claim for liquidity — 25% at end of year 2

Accreted value at claim 88.45¢ — two years' accretion, rates unchanged.

Lender

Total cash and in-kind value received: $410,642 of cash plus $9.53mm of STRIPS.

1 · STRIPS delivered in kind

$9.53mm

Face $10,776,818, accreted value at claim $9,532,024 (88.45¢), satisfying $10,776,818 of the Note; held to year 5 → full face.

2 · Matching unused reserve

$79,747

+ accrued earnings — 25% of the escrowed yr 3–5 coupons, returned outside the Note.

3 · Return premium — unearned prefund

$330,895

Pro-rata policy cancellation.

After the claim

Lender retains 75% of the Note ($32,330,453) · 15% warrant (75% of coverage) · 75% of each remaining coupon · policy on the remaining STRIPS.

4 · At maturity — two paths

Does the Project repay the $43.11mm bullet?

Repaid

Principal $43.11mm repaid or refinanced in full.
All five coupons received: $531,645 in total.
20% warrant vests and participates in the exit.
Cell options vest — Project 34% · Broker 10% · Dealer 5%.
BASE case lender proceeds $237.90mm · MOIC 5.52x.

Default / FAIL

Policy auto-files a claim for the full remaining STRIPS.
Principal returned at par: $43.11mm.
All five coupons received and consumed by the term's tax — net cash $0.
20% warrant retained in full as a residual option carried at $0.
MOIC 1.00x after-tax (1.01x gross) · cell options forfeited.

Every path ends at ≥ face plus the coupons — the only variable is the warrant.

Claims are exercisable at any time and satisfy the Note at full maturity value; the STRIPS themselves accrete 81.50 → 100 and reach par only at 5-year maturity.