Question
Background Kate Manderly is a winemaker who is the sole director and shareholder of Cross Key Wines Pty Ltd. The company operates a vineyard in
Background
Kate Manderly is a winemaker who is the sole director and shareholder of Cross Key Wines Pty Ltd. The company operates a vineyard in Gippsland with fifteen employees. The company has $800 000 in assets, wine-making equipment and a twenty year lease over the vineyard. Cross Key white wines have become very popular with the drinking public.
Kate recently expanded the offering to include red wines. In order to let this happen, Kate purchased a second vineyard in the Coonawarra region of South Australia. Ten experienced investors invested $500 000 each in return for:
a) 5% equity each;
b) guaranteed dividends until each investor's stake is returned (after a period of 5 years). The investors then intend to remain as shareholders, although dividends will no longer be guaranteed; and
c) Security over the entire property and shares of the company under the Personal Property Securities Register (PPSR)
The prospectus contains the following words: "Funds raised will be principally utilised to purchase land in the Coonawarra Region of South Australia, and winemaking equipment."
Question: Assuming that the investors choose to purchase shares, please explain with reasons which type share would be most suitable for these investors.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started