LivingSocial was forced to accept large concessions in order to convince its biggest investors to infuse another US$110 million for the second largest daily deal firm. Analysts and investors said that investors were able to accept advantageous terms that could potentially hurt the other backers of the company.
According to Chief Executive Officer Tim O'Shaugnessy declared that the new investment is a vote of confidence for our business. The US$110 million obtained for its investors special preferred securities that would payout a 3% annual dividend. This can also guarantee the investors would get their money back before any sale proceeds or IPO offering can be made on other investors. These special provisions were contained in the updated version of the certificate of incorporation of LivingSocial.
Also included in the deal would require LivingSocial to repay some amount of the refinancing in the last four years, should there be no liquidity event like a sale or IPO.
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