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Overview of Presentation:
EB-5: The BasicsIndividuals who might consider EB-5Direct vs. Regional CenterRegional Center EntitiesHow to create a Regional Center
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EB-5 : The Basics
Congress created EB-5 category in 1990 10,000 green cards available each year in this preference Two types of EB-5 cases: Direct and regional centers (RCs) 90-95% of EB-5 petitions now through RCs I-829s: filed 21-24 months after investor gets conditional
resident status I-829 procedure generally Legislative status of EB-5 program – extended to
September 30, 2015 – sunset of pilot program – likely to be signed this week.
November 3, 2011
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EB-5 Basic Requirements
New commercial enterprise (created after November 29, 1990)
Must “benefit the U.S. economy”Must create at least 10 full-time jobsMust invest $1 million, or $500,000 if targeted
employment area (TEA) (rural or high unemployment)Procedure: File I-526 (invest/actively in the process of
investing), then I-485/CP for CPR. Within 90 days of 2 yr anniversary, file I-829.
November 3, 2011
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Individuals Who Should Consider EB-5
Parent who wants the children to go to school in the U.S.
Investors from non-treaty countries and E-2 investors who don’t qualify for regular EB-5 or age out child.
Retirees Potential L-1 applicants who are nationals of China or
Russia Entrepreneurs who want to set up a new business in
the United States that will not create 10 jobs F-1 student who wants to start a business
November 3, 2011
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Individuals Who Should Consider EB-5
Spouse of permanent resident CEO/manager of a company who is not an L-1A
transferee Foreign nationals in a multiple-year immigrant
quota waiting list Individual owner of a business outside of the
United States who doesn’t qualify for an L-1 H-1B nearing six year limit Potential H-1B shut out by quota
November 3, 2011
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Difference between Direct EB-5
and Regional Center EB-5?
Individual EB-58
Investor buys business or starts new businessMust be 10 direct employeesFew applications
Regional Center EB-59
What is a regional center?Over 95% of all applicationsHuge increase in past 3 years
(over 242 approved)Main advantage =
Indirect employment counts
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What areRegional Center EB-5
Entities?
Regional Center Entity11
Apply to USCIS for designation approval
Ongoing administration and compliance responsibilities
Markets projects for investors
Due diligence regarding investors’ source of funds
Prepares I-526 and I-829 packages
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How to create a regional center?
Form I-924 Application Considerations and Costs
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Professional feesGovernment filing fees for I-924 - $6,230Regional center recoupment of costs through charges to investorsRegional center charges to project promoters MOU for Affiliated Projects Financing costsSource of Funds reviewBanking & Escrow costs
When is money available to developer?
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Investor must invest 100% (usually $500,000) before I-526 filedMoney can go
To project immediately – if so TEA designation made at this timeTo escrow
Released when investor’s I-526 is approved
How much Capital can be raised?15
Depends on job creationEconomist report projects job creationDivide by 10 = maximum number of investorsMultiply by $500,000 = maximum capital raise
Investment Must Be “At Risk”
Guaranteed redemption disallowedWhat is allowed?Third party insurance
How does it work?Does it violate “at risk” provisions?
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EB-5 Securities & Corporate Legal Considerations
PRESENTED BY:
JOR LAW, ESQ.
ARREA National Conference Las Vegas – September 25, 2012
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Biography - Jor
Homeier & Law, P.C. is a law firm devoted exclusively to corporate and business transactional law, including securities, for clients ranging from established and publicly traded companies, to startup businesses and entrepreneurs in a wide range of industries. The firm’s practice includes finance, secured lending, mergers and acquisitions, licensing, securities, venture capital, new media, technology, e-commerce, and other general transactions. Homeier & Law, P.C., is a leader in EB-5 related corporate and securities transactions, and represents a number of regional centers as well as private EB-5 clients.
Jor Law is a founding shareholder of Homeier & Law, P.C. As part of his regular corporate and securities practice, Jor routinely advises on EB-5 related transactions. In that capacity, Jor represents both investors looking to invest through the EB-5 program as well as businesses seeking capital through the EB-5 program including through regional centers. Jor frequently presents at EB-5 industry events, including those held by the American Immigration Lawyers Association, State Bar of California, and Los Angeles County Bar Association. Jor received his J.D. from Columbia University and his B.A. from UC Berkeley. Jor is a member of the California and New York State Bars. In December 2008, Mr. Law was named a "Best Lawyer" by LegalForce. For three years in a row, in each of 2009, 2010, and 2011, Jor was recognized by Super Lawyers magazine as one of “Southern California’s Super Lawyers – Rising Stars,” placing him among the top 2.5 percent of the best up-and-coming attorneys in Southern California who are 40 years old or younger, or who have been practicing for 10 years or less.
Disclaimer
This presentation is designed to provide practical and useful information on the subject matter covered. However, it is provided with the understanding that no legal, tax, accounting, or other professional services are being rendered or provided. If legal advice or other expert assistance is required, the services of a competent professional should be sought.
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Structuring: Equity or Loanor Equity & Loan Model?
Investor
Investor
Investor
Investor
Investor
Investor
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Common EB-5 Documents
Consents, restrictions, etc. Due Diligence LOIs vs Term sheets Equity vs Loan Agreements Guarantees & Security Agreements Subordination Call/put Side letters Leases / Management Agreements, etc. Consulting Agreements Joint Venture Resolutions & Corp Housekeeping
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Securities Offering Documents
Investor Questionnaire Subscription Agreement Offering Circular (PPM) Limited Partnership Agreement -or- LLC
Operating Agreement -or- Articles of Incorporation & Bylaws & Shareholders Agreement
Escrow Agreement(s)
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How does EB-5 involve securities law?
It’s just like a domestic money raise:
Financing secured from passive investors
+
Success dependent on management by others
=
A security
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Objectives of the Securities Laws
Two goals of Securities Laws adequate disclosure (tell the truth) prevent fraud (don’t lie)
Means to goal – registration and/or disclosure
Laws Securities Act of 1933 – main (“primary transactions” by
issuer) Exchange Act of 1934 – for “secondary transactions” (resales
by shareholders) Blue Sky Foreign Don’t forget… the 1940 Acts [ ICA… IAA ]
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Securities law requirements
The offering of a security must be registered or exempt Registration – IPO; expensive (time and $) Exemption – must fit within, or lost
Primary FEDERAL exemptions: Reg D and Reg S Example requirements:
Private offering (Reg D) Non-U.S. persons (Reg S)
Don’t forget STATE exemptions Don’t forget exemptions for large complex raises
Investment Company Act: < 100 s/h … “qualified purchasers”
Section 12(g) Exchange Act: < 500 s/h [JOBS = now 2,000!] * Need to tread carefully – i’s & t’s – CAN be done
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Finders
Broker-dealers –vs- Finders Broker-dealers are usually finders; Not all finders are broker-dealers
Finders do not Solicit investors Participate in securities offering Regularly introduce investors Receive compensation based on success
Finder issues – extremely fact specific so case-by-case
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Three stages when securities docs are needed
Generic doc set – accompany Regional Center application filing with USCIS Most general, least specific – still needs to address
anticipated project types Offering doc set – used to solicit investors
Most detailed - disclose all specific terms of actual project being sold
Exemplar doc set – for USCIS to use as template for measuring all I-526s BIG marketing plus – offering pre-approved Caution: no material changes after submission to USCIS
or start review anew
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The Team
“Same old, same old” – done domestically all the time This is a securities offering – SEC compliance required
Same as typical U.S. domestic equity raise – Reg D (+ Reg S) Need a team to prepare all parts of the offering:
Business plan – plan writer Job creation report – economist Securities offering documents – securities counsel (H&L does)
Transaction documents (debt/equity) – business lawyer (H&L does)
Entity formation(LPs, LLCs) – corporate lawyer (H&L does)
Financial pro forma projections – reviewed by CPAs Marketing: foreign broker introductions – U.S.-based EB-5 consultant
Team worries about details – YOU focus on Big Picture
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Contact
Michael G. Homeier, Esq. – (818) 450-1551 (direct); [email protected]
Jor Law, Esq. – (818) 450-1552 (direct); [email protected]
Clem Turner, Esq. - (646) 393-4702 (direct); [email protected]
Vanessa Au, Esq. – (818) 450-1556 (direct); [email protected]
Corporate Law -- Securities Law -- Business Transactions – EB-5
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What other options exist for raising capital under the EB-5 program?
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Having project “adopted” by certified regional center Purchasing already certified regional center – caution as to geographic scope & industry type Pooled investment with individual EB-5 petitions Troubled businesses – credit for preserving jobs
How does the developer find investors?
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Where are investors?
Personal contacts?
Brokers overseas?
Role of immigration counsel32
Advising developers of optionsPutting together team of professionalsReviewing documents for immigration complianceFiling regional center applicationPreparing and filing application for project preapprovalFiling EB-5 petitions for investors
Serious Resources. Serious commitment.
EB-5 Funding &Due Diligence SERVICES
Member, FINRA/SIPC
Proposal Prepared Exclusively For:
September 25, 2012
2012 AREAA National Convention in Las Vegas, Nevada
Our resources and commitment have earned us a role as a market leader in providing investment banking and corporate advisory services to both leading and emerging financial institutions and businesses.
Our professionals possess significant experience in nearly all facets of business transactions including debt & equity capital placements, mergers and acquisitions (over 90 M & A transactions over the past 20 years), recapitalizations and accounting and due diligence analysis.
Clients in our Creditor Advisory practice include most of the nation’s top financial institutions and we have performed in excess of 2,700 engagements on their behalf.
A FINRA Registered Broker-Dealer
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During 2011:
LCG performed over 550 engagements for more than 55 different financial institutions.
LCG and its affiliates assisted 45 businesses in successfully navigating the current economic environment, including financings, mergers and acquisitions, and restructurings.
Lender’s Consulting Group
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Lender’s Consulting Group provides independent due diligence and transaction support services to the financial services industry. Our professionals have extensive experience in credit underwriting, auditing, public accounting, workout management, business operations and account management. Our specialized experience provides lenders and investors with additional insight into transaction risks that cannot be provided by most other accounting and audit firms.
Field Examinations• Survey Exams• Recurring Exams
Lender Due Diligence• Credit and Operations Reviews• Bank Acquisition Due Diligence
Valuation Services• Portfolio Valuation• Business Valuation
Quality of Earnings• Analysis of Historical Revenue Trends and Sustainability• Analysis of Recurring vs. Non-recurring Expenses• Analysis of Cash Flow Projections
Bridging the Abyss between Lenders and Borrowers
A sampling of our institutional clients:
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LCG Capital Advisors
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LCG Capital provides a broad range of investment banking and advisory services for its clients. A FINRA registered broker-dealer and SIPC member firm, which provides advisory services related to corporate mergers, acquisitions and divestitures, recapitalizations, equity placements and certain other advisory and investment banking services..
Debt and Equity Placement• Debt Offerings and Refinancing• Equity Offerings• Capital Structure Strategies
M&A Advisory
• Sell Side and Buy Side• Management Buyouts
Debtor Advisory
• Restructuring and Planning• Working Capital Management• Pre-Bankruptcy Planning
Our Team
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Mike Xenick - Managing Partner Years of Experience: 22Expertise: EB5 Advisory, Private Equity, Mergers & AcquisitionsPrevious Employers: Atlantic American Capital Advisors, Communications Equity Associates, Ernst & YoungEducation: Masters and Bachelors in Accounting - University of Florida
Brian Smith - Managing Partner Years of Experience: 18Expertise: Corporate Finance, Commercial Credit, Structured FinancePrevious Employers: Textron Financial Corp, Health CapitalEducation: Bachelors in Finance and Economics - University of Tampa
Paul Epstein - Managing PartnerYears of Experience: 18Expertise: Commercial Credit, Underwriting, Due DiligencePrevious Employers: CitiFactors Financial, Healthcare Financial ServicesEducation: Bachelors in Finance - University of Tampa
Our Team
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Christopher Pizzo - Managing Director Years of Experience: 21Expertise: Corporate Finance, Mergers & Acquisitions, Restructuring & TurnaroundPrevious Employers: Ernst & Young, The Knot, Vested Capital PartnersEducation: MBA in Finance - NYU, Bachelors in Accounting - SUNY Albany
Jessica Lister – Analyst & Project Manager Years of Experience: 2Expertise: EB-5 AdvisoryPrevious Employers: American Land LeaseEducation: Bachelors in Finance – University of South Florida
MaryJane Wermuth – Associate Years of Experience: 5Expertise: Corporate Finance, Mergers & Acquisitions, Restructuring & TurnaroundPrevious Employers: Merrill Lynch, Gulfcoast Business Finance, Inc.Education: MBA in Finance – University of Tampa
EB-5 Funding Advisory Services Practice
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LCG provides a broad range of advisory and support services to companies and individuals involved in U.S. immigrant investor programs, including the Immigrant Investor Pilot Program (“EB-5 Program”). Our clients include:
• USCIS-approved EB-5 Regional Centers• Regional Center applicants, affiliated project developers• Registered foreign and U.S. securities representatives
We are trusted advisors to the principals and senior executives of these entities in their efforts to access U.S. and international capital markets to successfully and safely fund their project offerings.
As a broker-dealer registered with the SEC and FINRA, LCG’s process ensures the entire transaction is completed in compliance with U.S. securities laws and guidelines, especially transaction solicitation and payment of agent referral fees.
EB-5 Program Advisory Services Practice
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FINRA Compliant Placement Agent • Compliance with U.S. Securities Laws
-Solicitation-Investor Suitability-Payment of referral fees
• Review, Analysis & Preparation of Project Transaction and Subscription Documents
• Access to LCG’s secure virtual data room• Investor Intake and Related Compliance
-“Know your customer”-Suitability/Accredited Investor forms-Coordinate flow of investor capital
• Payment of agent referral fees Regional Center Advisory & Support
• Detailed Analysis of Prospective Projects• Due Diligence and Market Research• Capital Markets Assessments• Risk Assessment and Mitigation• Certified Business Valuations & Appraisals• Quarterly Analysis of RC Project Portfolio
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The LCG & USAdvisors EB-5 Program Process
EB-5 Funding Process
EB-5 Funding Process
EVALUATION
MARKETING
PLACEMENT• Access to project
information
• Evaluate and analyze business plan, pro forma financials, business case
• Assess management team/project owners
• Other detailed due diligence – project and EB-5 Program in conjunction with USAdvisors
• Move forward with accepted projects
• Listing of project on EB5Info.com
• Contact referral network
• Distribute 1-page project description to interested parties
• Evaluate suitability of interested investors
• Disseminate PPM and other marketing information to suitable investors
• Disseminate support information and answer questions
• Assemble remaining due diligence data room
• Facilitate completion and submission of subscription docs
• Facilitate transfer of Admin Fee and investment into escrow
• Assist investor counsel with I-526 prep
CLOSING
• Communicate project progress and updates to investors during I-526 approval process
• Closing
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PREPARATION
• Agree on process
• Develop process timeline
• Assist with prep or review of PPM
• Assist with or review marketing materials
• Set up initial data room
• Initial investor target list through proprietary referral network
• Prepare & coach project management on process
LCG’s EB-5 Funding Advisory Services Practice
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EB-5 Private Equity Placements• Solicitation and Funding of Private Equity & Debt Capital• Access to Foreign EB-5 Investors via LCG’s Proprietary Global Referral
Network U.S. Debt and Equity Placements
• Structuring of Entire Capital Stack• Access to U.S. Debt & Equity Capital via LCG’s Proprietary U.S. Lender
Database• Underwriting Services/Collateral Analysis
Registered U.S. Securities Representatives (“Agents”)• Assist with Initial & Ongoing Securities Registrations and Compliance• Access to High Quality Projects for Placement• We work with U.S. based real estate agents (AREAA members) to add to our
network as registered reps, providing new commission opportunities
We offer safety, security and risk mitigation to the project owner/developer and Regional Center
Tampa Headquarters
Fifth Third Center201 E. Kennedy BlvdSuite 325Tampa, FL 33602
Phone: (813) 226-2800
Email: Mike Xenick, [email protected] Jessica Lister, [email protected]
Web: http://www.lcgadvisors.com/services/eb-5-capital.aspx
LCG is a trade name for LCG Capital Holdings, LLC and its subsidiaries and affiliates which include: LCG Capital Group, LLC, a Florida limited liability company, which provides debt placement, commercial real estate financing, loan portfolio divestitures, and certain other financial advisory services; LCG Advisory Services, Inc., a Florida corporation, which provides strategic advisory, light turnaround and distressed consulting, restructuring advisory, accounting support, interim CFO/controller services, and other corporate consulting services; and LCG Capital Advisors, LLC, a Florida limited liability company and a FINRA registered broker-dealer and SIPC member firm, which provides investment banking, private placement and merger, acquisition and divestiture advisory services.
Contact Information
New York • Chicago • Houston • Dallas • Boston • Atlanta • Miami • Indianapolis • Los Angeles
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Serious Resources. Serious commitment.
© 2012 Wolfsdorf Immigration Law Group (all rights reserved) . The contents of this document are proprietary and should not be duplicated or shared without the express permission from Wolfsdorf Immigration Law Group.
This presentation does not constitute direct legal advice and is for informational purposes only. The information provided should never replace informed counsel when specific immigration-related guidance is needed.Question and Answer SessionQuestion and Answer Session
September 25, 201246
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