Appraisal Litigation I

Annualized return3

Term3

35 months

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Status

Closed

Recently funded

Accepting $50,000 - $250,000 investments

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Accepting $50,000 - $250,000 investments

Overview

Important notes

Eligible investors must verify that they are Qualified Purchasers. This offering is not available to pension plans, defined benefit plans, defined contribution plans, retirement plans, IRAs, 401(k) and 403(b) funds, and funds comprised of these plans and funds.

Highlights

Acquisition dynamics

Cashed-up acquirer

Liability fact pattern

First payment

Limited downside

Originator experience

It is believed that the acquirer took advantage of market conditions and economic uncertainty during the COVID-19 pandemic to submit a bid to acquire the company at a significantly depressed price that is not reflective of its fair value now that the economy has begun to recover. The assumptions underlying the projections used by the acquirer to justify the acquisition price back in 2020 are considered to be unrealistic and detrimental to the minority shareholders being “bought out.”
The acquirer consists of several large investment funds and other publicly-traded companies with billions of dollars in cash available to close the transaction. Coupled with the company’s strategic fit within the acquirer's existing operations, it is expected that the acquisition will close and that the acquirer will be able to pay the minority shareholders at an increased share price that is expected to be determined by the upcoming lawsuit.
Given the conflicted nature of the acquisition, it is expected that the courts will rule in the minority share group’s favor and determine that the acquisition price is below fair value to the detriment of this group.
In typical appraisal rights litigations, the courts have determined that acquirers who have been accused of acquiring a company for less than fair value must pay interest on the value of the plaintiffs’ shares during the course of the litigation. To minimize interest costs, acquirers typically make a large payment to plaintiffs early on in the process. As such, it is expected that 90% of an investor's investment will be repaid within six months of the acquisition closing. Remaining principal and returns, which could be achieved by a settlement or favorable court ruling, are expected to be repaid at the completion of the litigation process.
In order to participate in the appraisal rights litigation, Yieldstreet expects to purchase shares in the acquiree at prices below the slated acquisition price. Even if the courts reject the originator’s challenge and determine the previously agreed upon deal price was fair, Yieldstreet stands to earn the difference between purchase price and the acquisition price, which will be applied to help cover a portion, if not all, of the cost of litigation.
The originator currently has over $650M in AUM and has invested in over two dozen appraisal litigations across eight countries since 2015. The average realized return on these investments in the subject jurisdiction has been over 20%.

Essentials

Please refer the Private Placement Memorandum in the Resources section for more details about this offering.

Capital structure

Where may some of the Fund’s investments lie in terms of priority?

Cash flow

How do I get paid?

Assets

What is the asset underlying the transaction?

Returns & management fees

Ann'l management fee

Target net ann'l return

16-18%

Share of excess profits

80%

Schedule

Payment schedule

Event based

Term

Date

Term

36 months

Structure

Tax document

K-1

Offering structure

SPV

Expenses

First year expense

$300

Annual flat expense

$200

Docs

Content

Investing in private markets and alternatives, such as this offering, is speculative and involves a risk of loss, and those investors who cannot afford to lose their entire investment should not invest. Returns are not guaranteed.

"Annual interest," "Annualized Return" or "Target Returns" represents a projected annual target rate of interest or annualized target return, and not returns or interest actually obtained by fund investors. Unless otherwise specified on the fund's offering page, target interest or returns are based on an analysis performed by Yieldstreet of the potential inflows and outflows related to the transactions in which the strategy or fund has engaged and/or is anticipated to engage in over the estimated term of the fund. There is no guarantee that targeted interest or returns will be realized or achieved or that an investment will be successful. Actual performance may deviate from these expectations materially, including due to market or economic factors, portfolio management decisions, modelling error, or other reasons.

Investors

Originators

Resources

Company

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