Issue of loan capital at par - HELP

[Angelika]

Hi,
I am a little bit confused about this suject, please if you could help me I will be very very grateful.
If a company wants to raise capital (£5m) by issuing loan capital at par , what does the company need for the calculation the fixed rate interest or floating rate loan capital at LIBOR? Or both? Because as far as I know the loan capital (stock loan) uses usually fixed rate interest.
Please help
Thank you very much.
:P

[gj]

Loan capital is usually issued at a fixed interest rate - the companyknows where it stands as do those who invest.

The rate needs to be attractive enough to get people to invest, given the risk they may perceive in the investment.

Graham

[Angelika]

Thank you very much for your reply. But if company is considering to invest in an acquisition, could the loan capital, loan stock, be at fixed rate and floating rate at LIBOR+ ie 0.45%?
Looking forward to hearing from you.
Thank you so much

Angelika

[gj]

There is no reason why loan capital cannot be at a variable rate, as far as I am aware, the same way that bank loans etc are.


I have a Corporate lawyer contact who could advise further on this, let me know by PM if you need his details


Graham