The Government shall not set a valuation cap on the price at which the loan converts into equity on the company's next funding round. Where the matched investors have agreed a valuation cap with the company, the Government shall be entitled to those same terms.
On a conversion event, the loan shall convert into the most senior class of shares in the company. If a further funding round is completed within six months of the relevant conversion event, the lenders shall be entitled to convert their shares into the senior class of shares of the company in issue post that round.
The Government shall receive a minimum of 8% per annum (non-compounding) interest to be paid on maturity of the loan. The interest rate shall be higher if a higher rate is agreed between the company and the matched investors.
The loan shall mature after a maximum of 36 months.
The Government shall have limited corporate governance rights during the term of the loan and as a shareholder following conversion of the loan.
The company shall provide limited warranties, including in respect of title and ownership, capacity, its loan eligibility in accordance with the Government eligibility criteria, compliance with law, the borrowing facilities of the company, litigation and insolvency events to the lenders on closing of the loan.
The company shall provide limited covenants to the Government during the term of the loan and as a shareholder following conversion of the loan, including undertaking to treat the lenders and the holders of the conversion equity fairly and equally and to provide the Government with the same information rights as other investors in the company, and compliance with law obligations.
Most favoured nation
In the event that the company issues further convertible loan instruments to investors (including any new or existing investors which are not matched investors) with more favourable terms, those terms shall apply to the bridge funding provided under the scheme.
Negative pledge: The company shall not permit the creation of any indebtedness that is senior to the loan other than any bona fide senior indebtedness from a person that is not an existing shareholder or matched investor.
The Government shall be entitled to transfer the loan and following conversion of the loan, any of its shares without restriction to an institutional investor which is acquiring a portfolio of the Government’s interest in at least ten companies owned in respect of the Future Fund. In addition, the Government shall be entitled to transfer any of its shares without restriction within Government and to entities wholly owned by central government departments.