Basic NewCode Capital Structure comprises Senior Debt and NewCode Instrument (NCI). NCI comes in lieu of the traditional equity layer, carries a Contractual Fixed Return, is protected by the Downside Management Mechanism, and has a share in the Value Sharing Component.
At inception CS is sized according to the CEP, e.g. provides the funding necessary to the CEP which in turn provides for the Contractual Fixed Return during the CEP Period and satisfactory prospect of refinancing and Value Sharing at maturity.
The regeneration of the Capital Structure allows the funding of the Enterprise capital needs, as well as, in case net capital inflows exceed such needs, value distribution to Human and Financial Capital. Proportions of such distribution are pre-agreed within the NewCode Enterprise System, as well as, for Human Capital, the way such value is split between Governance, Management and Employees.
When the regeneration of the Capital Structure is carried out in an Alert situation (see Value Sharing and Downside Management Tab), net capital inflows are used to fund the adjustment measures provided for in the NES-Downside Management Mechanism.