Business and Corporations Law

4. Fresh Ltd (Fresh) needs to raise finance for the expansion of its fresh food business. It is considering two options:

(a) a public issue of redeemable preference shares: and

(b) a loan from Strategic Finance Ltd (Strategic). If it proceeds with option (b), Strategic requires Fresh to provide security for the loan. Fresh owns land, buildings, plant and equipment and trading stock (food for resale). Compare the advantages and disadvantages of both options.