Presentation from the Finnish Cleantech Cluster's webinar on growth and internationalization for domestic high-growth cleantech and technology companies. Contains general considerations on business structuring, tax planning, legal issues to consider if the company wishes to establish operations abroad and different forms of financing available.

1. Expanding from home markets
– legal possibilities and financing forms for
Finnish cleantech companies
Cleantech Cluster Webinar
Jan Lindberg and Mika J. Lehtimäki

2. 2
Cleantech Cluster Webinar
• Basic structuring considerations
• How cleantech financing works
• Legal possibilities for internationalization
• Use of holding companies
• How financing affects corporate structure
• Some thought for financing discussions
AGENDA

3. 3
1. Establishing a corporate structure relates to the actual configuration of the company, to
allow the best opportunities for growth, investment, internationalization and eventually
exit.
2. Finding an optimal legal , financing and tax structure already at the start could make
your company more attractive (and also later changes may have tax or other
consequences).
3. Should you have a separate legal structure for each project/business?
4. Corporate structuring also involves creating the internal framework of a company by
grouping different departments within a company. Within this process, the hierarchy of
positions is also structured.
BASIC STRUCTURING CONSIDERATIONS

4. 4
Cleantech Cluster Webinar
TIMELINE FOR INVESTMENT PHASES
Government
Business Angels
Seed capital
Some VCs
Bank debt
Asset Finance
Manufacturing Scale-up
VCs
Strategic alliances
M&A
Private Equity
Bank debt
Mezzanine
Public debt issuance
IPOs
Bank debt
Secondary offerings
Public takeovers
Technology R&D
Pilots &
Marketing
Technology
development
Revenue
TimeValley of Death
Venture Capital Development Capital Project devel., operations, construction

5. 5
Cleantech Cluster Webinar
Non-equity
Contractual JV
Other licensinc
agreement, collaboration,
distribution network etc.
Majority
investment
(like 2/3)
Branch office,
subsidiary,
(e.g. new production
facility)
Equity
Minority investment
Joint Venture
Share
Purchase /
Business
Purchase
Collaboration model Transaction growth Organic growth
Commitment
Integration
Control
LEGAL POSSIBILITIES FOR
INTERNATIONALIZATION

6. 6
Cleantech Cluster Webinar
• Main legal considerations:
• Entity form
• Debt/equity financing
• Investor entry level
• Taxation, Transfer pricing
• Corporate and decision making
• Auditing
• Profits/losses offsetting
• Dividends
• Flexible and tax neutral exit
Parent
Subsidiary
Owner Owner
BASIC STRUCTURING CONSIDERATIONS

7. 7
Cleantech Cluster Webinar
USE OF HOLDING COMPANIES
Use of HoldCO s driven by:
- Company law regime
- Management liability
… but also by tax, e.g.,:
- Direct tax benefits
- Debt-push down
- Tax neutral exists
Parent
HoldCo
Subsidiary
Parent
Subsidiary

8. 8
Cleantech Cluster Webinar
Mezzanine /
subordinated
General
Creditors
OpCo 1
Contract parties Customers
Government
support
Investment loans
Parent
HoldCo
Ltd
Contract parties Customers
OpCo 1
OpCo 1
OpCo 1
WHAT INVESTMENT AND FINANCING
DRIVERS SHOULD BE BORNE IN MIND
• Driven by:
– Shareholder relationships
– Ease of getting new equity into same
company
– Simplicity
– Requirements of government sponsors
• Driven by:
– Banks risk allocation
– Shielding of risk into separate entities
– Tax considerations
– Sale to PE /M&A/ IPO expectations
Senior Loans
Senior Loans
Investor Loans

9. 9
Cleantech Cluster Webinar
• Negotiate your Term Sheet well - it will take you a long way
• Make sure your Shareholders Agreement covers the expansion and new equity
investments into the company
• Don t jeopardize your intellectual property at any stage; e.g. be careful what you use as
security for your debt
• Make sure the loan agreements (covenants) do not restrict your business development or
structural changes too much (i.e. negotiate loan covenants explicitly)
• Make sure that you do not give up your ownership too early on and that you have a veto/a
say on important matters. However, note that:
A smaller percentage of something is worth more than one hundred percent of nothing.
SOME POINTS FOR FINANCING
DISCUSSIONS