GFOE - Structuring ESOPs The following figure illustrates...

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Structuring ESOPs The following figure illustrates the steps involved in establishing an ESOP. The ESOP borrows from financial institutions (step 1), and the employer sponsoring the ESOP guarantees the loan (step 2). The ESOP uses the borrowed funds to purchase stock from the sponsoring employer, and the stock is used to provide collateral for the loan (step 3). The employer then makes periodic cash contributions to the ESOP (step 4). The interest and principal on the loan are repaid by cash contributions to the ESOP from the
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This note was uploaded on 01/28/2011 for the course FIN 315 taught by Professor Welker during the Spring '09 term at IUP.

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