grade entities into cash that can be used for any business purpose.
There are several creative approaches to utilizing Monetization Financing to provide the funds necessary for a company to acquire a business.
One approach is to monetize future revenue streams from service, supply, maintenance or other agreements that the company has with investment-grade rated entities.
This can be accomplished with an amendment to an existing agreement or a new agreement that provides for sum-certain and date-certain unconditional promises to pay. We can provide Monetization Financing of the future minimum required payments and perhaps provide enough cash up front to pay for the acquisition.
Another approach we see often is where an investment-grade rated entity wants to divest itself of an operating unit or division, but still reap the benefits of their products or services. This company can cooperate with a management lead buyout or the sale to another company that they have confidence in taking over the business and running it successfully.
As part of the sale transaction, the seller can enter into an agreement to purchase products/services from the entity they are divesting over a period of time. If the Agreement provides for sum-certain and date-certain unconditional promises to pay then we can provide Monetization Financing of the future minimum required payments and perhaps provide enough cash up front to pay for the acquisition.
Another approach would be if an investment-grade rated entity acquired a smaller company by utilizing our funds enabling them to structure the transaction such that they would not need to enter into a note with the seller (non-debt) and could pay for the acquisition solely through the forecasted benefits over a number of years while never paying a greater amount on a periodic basis than the forecasted cash benefits derived from the acquisition.
All that is needed is an Agreement that provides for sum-certain and date-certain unconditional promises to pay in amounts, the present value of which, is equal to the purchase price. We can then provide Monetization Financing of these future required payments and provide the funding at closing for the acquisition.
Sample Transaction :
Many investment-grade rated entities are seeking to divest themselves of the physical plant and equipment related to performing assets, moving them off their balance sheets, while at the same time still seeking continued benefits from these assets.
One industry section that we are participating in is Big Oil.
Several of the big oil companies are looking to divest themselves of the underlying real estate and operations of large lots of gas
stations, while still having these stations sell their gas. They often turn to companies that have experience independently owning and operating gas stations.
We can provide these operators with the funding to acquire the stations provided that the operators enter into an agreement with the Seller of the stations whereby the Seller agrees to make up any short falls in repayments.
One way to get the Seller comfortable doing this is by the Seller and Operator entering into an agreement, with a term that matches the repayment term, whereby all credit card receipts go into an escrow account. On a monthly basis the trustee will make the required payments (sum-certain/date-certain) to us and the balance will be distributed to the Operator.
Based on historical results and forecasts both the Seller and the Operator can come to agreement on repayment amounts and dates that give
them both the comfort that sufficient funds will always be available to repay us.
The agreement can also provide the Seller with additional security such as long term exclusive fuel purchase agreements, 1st mortgageon the real estate of some or all of the properties, etc. Both companies are happy. The seller has divested itself of certain assets, received all their cash at closing, and continue to have a revenue stream from the distribution of fuel.
The acquirer is happy because they were able to fund the entire acquisition at competitive fixed rates, without any fees or diluting any equity.
Where Monetization Financing Works Best:
- Service and Supply Agreements
- License Agreements
- Energy Savings Contracts
- Waste-to-Energy Facilities
- Renewable Energy and other Green Initiatives
- Real Estate and Project Funding for Cities and Counties
- Deferred Compensation
- Real Estate and Infrastructure
- Funding for Government Programs and Projects
- Monetization Financing vs Traditional Funding
- Monetization Financing Benefits
- Monetization Financing FAQ’s
Simply stated we offer the best financing package available to investment grade entities – low interest rates, no equity or board seats, no covenants, no oversight and done in a quick and efficient manner.
Industries Where Monetization Financing is Working:
- Waste Management
- Water Purification
- Green Energy (Power Purchase Agreements)
- Waste-to-Energy Facilities
- Wind Turbines and Solar
- Oil and Gas
- Wastewater Treatment Plants
- Food Processing
- Nearly all industries can be approved!