GROUP ASSESSMENT TUTORIAL QUESTION GATQ5 You have been approached by Aisha and Iluka, directors and majority shareholders of Yisup Ltd, which is a retail clothes business located in Glenbrook, New South Wales. They believe there will be a continued downturn in clothing sales, but an increase in local tourism. Therefore, although the company will continue the clothing business, the directors wish to expand into other areas, by buying a number of properties in the Blue Mountains and Capertee Valley region to convert into bed and breakfast accommodation to cater to that market. The company needs AUD10 million if it is to put its expansion plans into operation. Yisup Ltd is able to borrow AUD5 million from the Commonwealth Bank, which insists on a mortgage over Yisup Ltd's warehouse, and a security interest in the stock contained in that warehouse from time to time. These constitute Yisup Ltd's only major assets, but at current valuation should comfortably cover the debt. Yisup Ltd also has a line of credit from its wholesale supplier, that is subject to a personal guarantee from the two directors for $500 000 worth of the debt. To raise the rest of the money, the directors are considering making an offer to lluka's wealthy family, to invest in the business. They are planning to have Yisup Ltd issue a mixture of shares and debentures. If the expansion is successful, they also want the option for the shares to come back to the company. The directors do not want to lose control of the business. Iluka is convinced that his family is happy to leave management in the current directors' hands, but that they will want the best possible revenue stream, and security, for their investment. The directors seek your advice on: (a) What types of shares and debentures should be offered to lluka's family? (b) What legal procedures must be followed? (Note that you have previously offered them advice on Chapter 6D of the Corporations Act 2001 (Cth). You have checked that no relevant amendments have been made to the Act, so that advice is still current and does not need to be given again.) (c) Iluka's family will want detailed information on the nature of the debts owed to the other creditors and the effect on their security