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Service & Supply Agreements :
A contract manufacturer of pharmaceuticals has a multimillion dollar, five year contract with an investment-grade rated big pharma company. The contract manufacturer is seeking capital for operations and would prefer not to go to the equity markets or pay high fees for debt financing. The contract manufacturer was able to get the big pharma company to agree absolutely and unconditionally to make certain required minimum payments on a quarterly basis in years four and five of the contract. SGC provided Monetization Financing and provided the contract manufacturer with the present value of the future minimum payments at investment rates, on a non-recourse basis, without any fees, points, or equity.
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License Agreements :
A private equity firm with various IP holdings, including rights to the name and likeness of a rising star in the golf world, has been approached by many companies looking to license the brand. An investment-grade rated sporting goods company is one of these companies. Rather than just negotiating a deal which pays the license fees and royalty payments over ten years the private equity firm negotiates the inclusion of language that provides for an unconditional promise to pay minimum license and royalty fees on an annual basis. SGC can provide Monetization Financing such that the private equity firm receives the present value of the future minimum license and royalty fees at investment rates, on a non-recourse basis, without any fees, points, or equity, and without having to wait ten years.
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Acquisitions :
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 SGC is 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. SGC 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 SGC 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 SGC. The agreement can also provide the Seller with additional security such as long term exclusive fuel purchase agreements, 1st mortgage on 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.
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Energy Savings Installations :
Energy savings - whereby $X million of equipment installed will save a Plant a minimum in excess of $Y million on their utility cost per year over a useful equipment life of 10 years. SGC will fund Energy Installation Company an amount equal to $X million plus profit from us at closing while we take assignment of a 10 year annual payment in arrears of less than $Y million, an amount which was negotiated between Energy Installation Company and Plant in an operating and maintenance agreement. This allows the Plant (investment-grade rated Obligor) to upgrade their facilities today and begin realizing the savings with no out of pocket nor any diversion of allocated capital budget dollars and receive an "infinite rate of return" on their investment as the energy savings will always be greater than the annual payment.
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Real Estate & Infrasture :
ABC Company is an investment-grade rated company with a division that specializes in construction of large commercial developments. ABC Company has an option on a tract of land in a major US city that it wants to develop a 50 story office tower on. They require $400MM to acquire the land and build the building. ABC Company can enter into an agreement with SGC agreeing to make required minimum payments in the future, the present value of which is $400MM. At closing SGC would provide ABC Company with the $400MM that they need to complete the acquisition and fund the construction. There are many benefits to ABC Company utilizing Monetization Financing for this project. In addition to low fixed rates, no fees or equity, nor the need to tap existing lines of credit, the repayment schedule can be set up so that repayments don't commence until the project is near completion or completed.
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Renewable Energy and other “Green Initiatives” :
A Municipality is in need of an alternative way to dispose of 200 tons of waste per day. After reviewing various technologies and developer proposals the Municipality decides to work with a local developer that has a steam reforming process which will produce a high quality syn-gas product that can be used for energy production or as a building block for transportation fuels. The facility has the ability to accommodate a wide variety of wastes such as municipal solid waste, municipal sewage sludge, animal manures, wood waste, agricultural waste, C&D waste as well as others. The facility will be constructed on municipal property located adjacent to the existing transfer station and landfill. The developer is able to fund the construction of the facility by entering into a 20 year waste disposal agreement with the Municipality that contains minimum required payments that are significantly less than the current waste disposal fees being paid by the Municipality. SGC provides an amount of funding equal to the present value of the future minimum required payments under the waste disposal agreement.
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Deferred Compensation :
A former first round draft pick of an NBA team negotiated a major pay package that included $20MM in deferred compensation to be payable over the next 10 years. In this case, the player's representatives negotiated that the deferred compensation be structured in the form of an annuity to guarantee the future payments. SGC can utilize Monetization Financing to provide the player with cash today - the present value of all or part of the future payment stream. This is done at very competitive rates without any fees. The player now has the benefit of the money to invest as he chooses to.
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