Wardy
NSC's Benefits Guru
Not being simple at all, it's a complex thing, which as a qualified accountant I may still have missed one of the ways that we are planning to use them, but my understanding is .....
that it's a formal way of creating a directors loan. Rather than just having a loan account on the Balance Sheet with terms of the loan either agreed or left completely open-ended (which does sometimes happen, but banks HATE that) we could take £60m worth of loans (probably from Directors, but doesn't have to be) and we would issue them with this loan note.
Say, for example, Richard Branson wanted to pump £50m in, we would issue him with £50m worth of these loan notes. For the bank, this is all nice and clear, that he has no security behind this loan (security that teh bank want first charge over) and everyone also knows there will be no need to repay them before 2023 at the very earliest.
Was Richard Branson used to show the point? Or do you know someting we don't and the Virgin at Falmer Stadium is currently being built.