How to convert or repay a convertible loan note

This article covers how you would convert or repay your convertible loan notes on Capdesk

A convertible loan note refers to a short term loan from an investor to a company, where instead of receiving cash plus interest the investor can receive company equity. If you are looking to record convertible notes onto Capdesk, you can find the support article on how to do so here.

You may come across a situation where you would like to convert/repay a noteholders convertible loan note. This article will cover how to convert and repay notes on Capdesk. 

 

Conversion: 

Click on the "Convertible Notes" tab under Ownership. Once you have this page open, you will want to click on the "..." action button to the right of the relevant noteholders name, this will open a drop down menu. 

Click on "Register Offline Conversion" to take you to the following page: 

This example is showing a convertible loan note with a conversion discount %.

With this page, there are a few options you have to select/input: 

• Date of conversion: The date the note of when the conversion took place 
• Select either convert all outstanding or specify amount to convert:
  - Convert all outstanding: This will convert all the outstanding notes into shares 
  - Specify amount to convert: Manually inputting a specific amount you would like to be converted
• Registration Date: This is the official date of entry into the shareholder register. (you can choose this to be the same as the transaction date, or leave as blank)

Once you enter the date and registration date for the note, you will be asked for a pre-money valuation. To calculate a discounted conversion price, we need to know the company valuation prior to conversion and prior to any associated funding round this conversion has been triggered by. This is not a compulsory field to enter, it is only if you would like Capdesk to calculate the shares to be converted. 

Once you enter the pre-money valuation, you can see Capdesk has calculated the Discounted Conversion Price and the Calculated shares. You can use this or specify your own, if you are going to specify your own you will need the share price and the number of shares. 

If you would like to assign a funding round to these notes, you will need to click the Advanced drop down and then fill in the required field. If you are missing the desired funding round and need to add another, you can find the support article here.

A new feature on Capdesk is that you can directly add a new funding round on the conversion by clicking the grey "Add" button to the right of the funding round, once you have added the new funding round, you will be able to tag the conversion to the drop down shown in the screenshot.

If you have any documents you want the noteholder to have access to, you will need to upload before publishing the option by clicking the Comments and Documents drop-down and upload the document there by clicking the green "Add document" button.

Once you've entered the relevant details and if you aren't live click the "Save Draft" button. If you are already live, you can select either "Save Draft" or "Publish" buttons. 

To view the conversion, please click on the circled transactions shown below:

(It is currently showing 1 draft as the conversion is saved a draft, if it were published it will show 2 published transactions)

Once you have clicked on this button, you will be redirected to the transactions page, to have a detailed view of the conversion, simply click on the transaction:

If it is saved as a draft, you have the ability to delete and record a conversion, if you have published the conversion, you will not be able to delete and you will need to revoke the transaction.

To delete/edit a conversion, you click the actions button to the right of the noteholder name. 

Clicking "Edit" will take you back to original "Convert note" page shown before, from there you can make any changes. Clicking the "Delete" button will remove the conversion completely.
Note: This feature is only accessible in draft mode, so if you were to publish a conversion you will not be able to do this.  

If the convertible note has a fixed price conversion:



It works largely the same as a regular conversion, however the shares and share price are pre-calculated for you. However if you do not want to use these values, you can input your own values using the "Specify" options.

Repayment:

Repayment is largely similar, like conversion please navigate to the convertible notes page and the relevant noteholder. However, for repayment please click the Register Offline Repayment button, shown below:

This will take you to the repayment page, where you will need to enter the following details:

• Date: The date the repayment was made.
• Select either repay all outstanding or specify amount to repay:
  - Repay all outstanding: This option will count all the outstanding amount as repaid
  - Specify amount to repay: A specific amount to be repaid, you will be asked to enter the amount 
  

The advanced and the documents section works exactly the same as the conversion page. 

Once you've entered the relevant details and if you aren't live click the "Save Draft" button. If you are already live, you can select either "Save Draft" or "Publish" buttons. 

To view the repayment, please click on the circled transactions shown below:

 (It is currently showing 1 draft as the repayment is saved a draft, if it were published it will show 2 published transactions)

Once you have clicked on this button, you will be redirected to the transactions page, to have a detailed view of the repayment, simply click on the transaction:

If it is saved as a draft, you have the ability to delete and record a repayment, if you have published the repayment, you will not be able to delete and you will need to revoke then you can enter the transaction again.

To delete/edit a repayment, you click the actions button to the right of the noteholder name. 

Clicking "Edit" will take you back to original "Repay note" page shown before, from there you can make any changes. Clicking the "Delete" button will remove the repayment completely.
Note: This feature is only accessible in draft mode, so if you were to publish a repayment (or conversion) you will not be able to do this.  

Thanks for reading this support article. 

If you need further assistance, you can reach out to us by submitting a support ticket here.