Structure Financing

STRUCTURED FINANCE PROPOSAL

  1. BACKGROUND

 Our lender is an investing banking boutique, and where circumstances justify our decision, we are able to provide selected clients a structured finance solution to meet the client’s capital raising challenges.

Capital raising in many instances takes longer than anticipated, and in the current economic circumstances the finance world finds itself in, raising capital is not an easy process, and the cost of chasing finance can become expensive and demotivating.  In most cases, a client is furthermore under pressure to commence its operations or to commence the achievement of bankable elements in the project development process, and thus the cost of delays in securing finance ahead of deadlines becomes unbearable and could by implication lead to loss of credibility in the market and/or the loss of very profitable opportunity which will have to be by-passed due to the lack of funding.

In order to address these challenges, we have carefully structured a financial solution that will expedite funding, alleviate time pressures off your anticipated timelines, and in which we could be of immediate assistance.  Our structured finance solution was conceptualized over many years of active legal and financial activity across a wide and diverse set of sectors in the developmental arena, and thus ideally suited to new start-ups, companies or projects with minimal collateral and/or revenues until fully developed, and thus would find traditional bank finance very onerous to achieve, as we deal with these elements, or rather lack thereof, within our structured finance approach in implementing the solution.

We are hereby offering you, in principle, and dependent on various terms and conditions still to be processed and met with prior to a final loan and security agreement being legally concluded, a structured finance secured loan facility, which in due course, we may wish to convert to an agreed equity position in your opportunity when such decision may be fairly considered by both parties concerned, if that is to mutual benefit at the time.

This structured finance solution will facilitate an easier and less onerous capital facility, and thus also expedite the process and requirements to capital drawdown.

  1. THE PROCESS FORWARD:
  • Client considers proposal and term sheet.
  • Should it be decided to proceed with the structured finance facility, client must submit the requested documentation and provide evidence of proof of funds indicating the financial ability to pay for the issue and facilitation of an acceptable financial, investment, credit or insurance guarantee which will be utilized in the finance structure and which will off-set the counter party risk in the finance facility. The costs that have to be covered by the client are indicated below.
  • Client to complete the formal documentary requirements, i.e. KYC and CIS requirements as well as the loan and security agreement after due approval and acceptance of the term sheet.
  • The lender and client address any conditions precedent as per requirements indicated on the term sheet and loan and security agreement.
  • Client to transfer the fees to escrow attorneys directly.
  • Once the structure’s full documentation package is complete, the lender will submit same to its warehouse credit and/or associate capital providers.
  • The credit, insurance, investment and/or financial guarantee issue is negotiated, issued and legal process completed, paid for and issued to enable lender to draw down on credit lines.
  • First and subsequent capital drawdowns by client commence within 45-60 days of final submission approvals and documentation and compliance acceptances.
  • Drawdowns will be scheduled in most cases (dependent upon the quantum of loan capital required) over a few monthly drawdowns, or as per specific agreement with client.
  1. INDICATIVE TERM SHEET

Borrower:

Lender(s):         TO BE DETERMINED

Capital Loan Amount:    ONE HUNDRED MILLION DOLLARS ($100,000,000.)

Purpose of Funding:      ACQUISITION FINANCE/OPERATIONAL/WORKING CAPITAL/DEV LOAN

Attorneys:         LENDER TO APPOINT IN DUE COURSE=

Auditors:           LENDER TO APPOINT IN DUE COURSE

Term of Loan Facility:

Min:                  10 years, 24 months payment moratorium, thus 8 year’s repayment period.  (We can refinance at the end of this term.)

Structuring Fees and     $245,000.

Financial Guarantee Instrument:

Due Diligence and Legal Fees:   $30,000.

Drawdown Schedule:     1. First drawdown of 25% of capital loan amount within 45 to 60 days.

  1. Second and further capital drawdowns of 25% each after each 30-day period thereafter.

Interest Rate:    5% per centum per annum, annualized.

  1. COST OF IMPLEMENTING STRUCTURED FINANCE STRUCTURE

In order for this structured finance solution to be implemented, it is imperative that client enables the credit enhancement or financial guarantee instrument(s) to be issued.  The costs relative to the financial solution it provides, is minimal, and thus the risks the structure carries have been substantially mitigated.

The costs have to be paid after signature of our loan and security agreement for the successful facilitation and issue and transfer of such investment, credit issuance and/or financial guarantee.

100% portion of the costs in respect of the issue of the financial guarantee will be repaid to client should, for whatever reason, the financial guarantee not be issued, or the final capital drawdowns not be successfully implemented in favor of client.  This however equates to very minimal risk on the underlying financial structure until the capital drawdowns commence and are facilitated.

We will require evidence that the costs for the issue of guarantees as per above is thus available in cash in an acceptable bank or similar account for client’s benefit before we can proceed to the final loan and security agreement being drafted and submitted for execution, KYC and CIS approvals and final submission stage.

  1. CONCLUSION

Structure finance is design mainly for new construction development such as commercial building, hotel and resorts, residential development, energy development, i.e. oil and gas refiners, solar plants, electricity plant, railroad system and transportation etc. However, this can be used for acquisition for the same except it will take 4 months to get all the funds. The draws are paid out over a 4-month period and the project funding from start to finish is 45-90 days depending on the size of the project.

  1. PROCEDURES AND TIMELINE:

Once the file has been review by my office an indicative term sheet is then sent out in 3-5 business days. Prior to all this however all the application and data must be received and reviewed by the lender and my fee agreements and NDA are signed and sent back in to our company before the indicative term sheet can be issued. Once the indicative term sheet has been received by the lender it needs to be reviewed and signed within 3-4 business days, again no money is needed at that time. Once this is signed and sent back than a loan and security agreement is sent from the lender which will then require the due diligent fees within 5 business days. A conference call meeting will be set up with the lenders representative to discuss the details of the contract and answer all questions. The performance bond mention above won’t be due until the guarantor has finished underwriting the file and has called for the quoted funds to be sent from the escrow account you have already set up in advance as part of your proof of funds for this transaction.

It’s important to keep in mind that once the lender calls for the instrument to be cut there is a 2% penalty the guarantor incurs if he does not perform. That is why it is imperative that your performance bond funds are ready willing and able to be wired out without delay. All of this is gone over with the lender in complete details before any funds are wired. Keep in mind that all fees paid are fully refundable in the event that funding does not take place.

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