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Metapath

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Metapath
Question 1. Metapath’s capital structure and rounds of financing Analyze Metapath’s capital structure, in particular the various forms and prices of preferred stock from the multiple rounds of financing. How has this capital structure affected the offer from
Robertson & Stephens? How would RSC’s participating preferred interact with other tranches of preferred stock? The RSC offer of $11.75 million is more than Metapath has previously raised in all four rounds combined, so RSC is taking on more risk by offering this much funding. Because RSC will be putting up so much cash, RSC is going to want stricter terms to compensate them for their risk. In addition, Metapath has a high leverage ratio, which adds on to the risk the equity holders are exposed to. Therefore, RSC is proposing a participating convertible preferred stock instrument which allows them to achieve higher payoffs in the upside while still eliminating their downside risk. The participating preferred terms is necessary according to RSC because if Metapath’s management sells the company after the next round, RSC will receive little more than they put in while earlier shareholders and Metapath management will see very attractive returns on a low cost basis.

Additionally, the latest

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