Finjan Holdings Inc (FNJN)

[lbcb123]

The repayment of the preferred shares has a tiered approach. It was 1.5X the borrowed amount up until day 90 for redemptions. It is 1.65X the remaining amount up until day 720. This takes us until May of 2018 and it is likely they will be paid off by then. There are provisions for after 720 days, but that is highly unlikely.

20% of licensing revenue for the first year is earmarked to redeem a portion of the preferred shares. Their actual proceeds after fees was $9.49M. They have already paid $2.593M towards redemption. 20% of licensing revenue will continue to reduce the amount until May of 2017 and then it goes up to 30%. It is probable they will have a good chunk of it paid off by the time they collect from Blue Coat, but that will probably be when the preferred shares get fully retired.

This was not cheap. They will probably pay back $16M total for receiving the $9.49M net. Put it in perspective. Giving up $6.5M out of the $40M from Blue Coat is a no-brainer for the cash infusion. It would have taken dilution of over 10M common shares to raise that money! At the end of next year we will be sitting pretty and the outstanding shares will STILL be around 23M. The deal was a no-brainer to benefit us common shareholders.

Don't worry if you don't understand all the nuances of the preferred shares. Bottom line is it will cost them about $6.5M including the closing fees to have ZERO dilution of the common shares. Having the cash spurred Proofpoint to settle as well as other licensing deals instead of having everyone wait them out to see if they would go broke. In my opinion, the cost for the preferred shares has already been made back!