Timeless Luxury Group is a Switzerland-based company specializing in luxury holidays, villas, yachts, and resorts. The company has recently announced a Security Token Offering (STO) issuing its TMLS token.
Switch from traditional bonds to security tokens provides greater flexibility
Timeless Luxury Group is an established business that does not have any connection to blockchain or the digital sector in general. So far, the company has mostly relied on bonds to fund its operations. It ran its first bond issuance in 2013 and raised EUR 10m on the Düsseldorf Stock Exchange, and another EUR 10m in 2017. But traditional bond issuances come with their limitations.
CEO Michael Gössl says, ”Raising money using capital markets offers no flexibility, and the rules are very rigid. For bonds, there is the loaned amount, the coupon and the maturity date. Sure, there are slightly different ways to structure bonds, but it’s all a variation on a theme.”
Now the management looks at crypto markets as an alternative way of fundraising. Gössl says, “An asset-backed digital security token offers something totally different [to corporate bonds]. The terms are flexible and written into a smart contract, and it’s instantly liquid on crypto exchanges or peer-to-peer. It offers a new way of investing, and we’re at the tip of the iceberg in terms of where it will go.”
TMLS tokens include a profit share and resort discounts
Timeless is going to use the money raised to expand its business. STO investors will have the opportunity to participate in the planned development of the company and can receive discounts on holidays. Thus, the Token is a non-voting profit share offering with additional lifestyle benefits.
In concrete terms, investors will be entitled to receive 40 percent of earnings before taxes, depreciation and amortization (EBTDA) per annum from the company’s business units “Timeless Hideaways” and “Timeless Resorts.” Timeless Hideaways develops and operates retreat hideaways and Timeless Resorts plans to develop and operate high-quality resorts.
Additionally, investors will get 10 percent of all revenues of the other three divisions which are yachts, the wine, spirits, and cigar business, and the planned global franchise concept. Dividends will be paid out in USD. Investors who buy at least 1,000 TMLS will receive discounts of 20% on Timeless Hideaways and Resorts.
The Timeless STO shows the flexibility of security token offerings. It’s possible to encode almost anything into a smart contract as long as it’s legally compliant.
U.S. accredited investors can participate in the STO
Another reason why this STO stands out is that it’s legally compliant to U.S. regulations, meaning accredited U.S. investors can participate. Due to the recent crack-down of the U.S. SEC – which mostly targeted ICOs – many STOs have excluded U.S. investors to avoid the legal risk and the additional legal requirements.
Gössl says, “We have taken regulation very seriously. It adheres to SEC guidelines, and we have worked closely with our partners to ensure we take appropriate measures to safeguard investors.”
Timeless is working with established U.S. partners to ensure its STO complies to the recent SEC guidelines issued earlier this year. TriPoint Global Equities will act as broker dealer. The company is specialized in Reg A+, IPOs, M&A, and Private Placements, and most recently also Security Tokens. It has established an online division called BANQ which will act as the lead managing placement agent for the TMLS STO.
Furthermore, New York City-based stock transfer and registrar firm Vstock Transfer’s security token division Vtoken will act as the SEC-registered transfer agent for the STO and as custody provider for the security tokens.
According to Timeless, its STO is the first foreign Security Token Offering in the U.S. to use an SEC-registered transfer agent. “As an established business, we can’t cut corners or take risks with this process,” says Gössl. “That’s why we have committed to this fully compliant, regulated offering.”
TMLS tokens are based on the Ethereum ERC-20 standard and are pursuant to the exemption from registration under the Securities Act provided by Regulation D, Rule 506(c) – a common exemption used by STOs that limits U.S. investors to accredited investors only. For international investors, Regulation S applies, which defines when an offering of securities is deemed to be executed in another country and therefore not be subject to certain registration requirements.
Outlook: Timeless STO interesting from a regulatory and business perspective
The TMLS STO will be interesting to watch, both from a regulatory as well as a business perspective. It’s not only one of the first European STOs allowing U.S. investor participation but also one of the first established non-digital companies undertaking an STO.
As STOs become more popular and the regulatory process becomes more transparent, more established businesses will opt for crypto-fundraising. Switching from corporate bonds to security token offerings offers multiple advantages and will eventually become a mainstream fundraising method for businesses across all industries. Michael Gössl says: “Timeless is pioneering this method of fundraising that will become the new normal.”