Core to the Net Value calculation is the Graduation Factor formula that awards 8 points on the Ownership scorecard. The time-based graduation factor reduces, over time, the level of debt attributable to the economic interest held by ‘Black’ Participants.
Q | To earn the points available, when is the first-year repayment of the 10% target to claim Ownership by using the Graduation Factor formula payable?
A | A `year’ is not defined in Schedule 1; therefore, it takes on the ordinary meaning of 12 months commencing on the first day of the first month and ending on the last day of the 12th month. As such, the 10% target for the first year commences on the first day that all rights and obligations in Ownership become enforceable. The intent is to ensure that there is always value in the hands of ‘Black’ Participants, from day one, before awarding Net Value points. It is for this reason that entities offer ‘Black’ shareholding at a discount.
Ownership Services are available to assist with an analysis of Ownership transactions.
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