Companies often have difficulty arranging equipment financing secured by new or used equipment, or by a combination of both. This difficulty can arise from perceived low collateral values of the equipment sought to be financed by the borrower’s existing equipment financing company or lender, adverse operating conditions in particular industries, or from a host of other factors.
The London Manhattan Company is in daily contact with a large universe of specialty equipment financing companies and lenders. LMC has been extremely successful in finding equipment financing for its clients by utilizing sale leaseback structures as well as conventional equipment financing. Refinancing portfolios of existing equipment financing loans previously financed on a one off basis (i.e., one piece of equipment at a time) can result in dramatically lower debt service for the borrower, as well as longer (more favorable) amortization periods, and increased availability for the client. Case studies follow from recent equipment financings provided by The London Manhattan Company.
Equipment Financing Case Study 1: Used Equipment Sale Leaseback
The London Manhattan Company is pleased to announce it recently found New and Used Equipment Financing for a manufacturing client located in the Northeastern US. This equipment financing produced substantial new liquidity for the borrower.
The Situation:
The borrower was a historically profitable manufacturer with approximately $20 million in annual sales. It was forced to terminate an unprofitable relationship with a major client, and struggled to replace lost revenues thereafter. As a result, the borrower has had virtually no net income for the two prior years. The borrower was desperate for liquidity and was anxious to secure a new equipment financing facility.
The Financing:
This equipment financing had the following attributes:
- Amount Financed: $4 Million
- Structure for Existing (Used) Equipment Financing: Sale Leaseback
- Structure for New Equipment Financing: Lease Line of Credit
- Term: Forty Eight Months
- Extensions: To Sixty Months Upon Certain Conditions
- End of Lease Options: Borrower Can Repurchase Equipment or Enter Into New Lease
Equipment Financing Case Study 2: Used Equipment Financing Term Loan
The London Manhattan Company is pleased to announce it has recently found provided Used Equipment Financing for a construction services and equipment client located in the Western US. This equipment financing cut the borrower’s monthly equipment debt payments by over 50% due to a ten year amortization schedule, which is exceptional for used equipment financing.
The Situation:
The borrower was a historically profitable construction services and equipment client with approximately $12 million in annual sales and robust cash flow. However, the company had an inefficient array of just under 30 different equipment financing facilities that consumed all of the cash the company produced, and then some. The borrower was desperate for liquidity and debt service relief, and had approached numerous equipment financing companies prior to contacting LMC.
The Financing:
This equipment financing had the following attributes:
- Amount Financed: $17 Million
- Structure for Existing (Used) Equipment Financing: Secured Term Loan
- Term: Sixty Months
- Amortization: 10 Years
- Pricing: Computed on Prime Plus A Margin
- Debt Service Relief: Monthly Payments Reduced By More Than Half
- Additional Availability From New Equipment Financing: Yes
Equipment Financing Case Study 3: Used Equipment Financing Bridge Loan
The London Manhattan Company is pleased to announce it recently found equipment financing for a manufacturer located in the southeastern US based solely on the financed equipment’s collateral value. The borrower could not provide debt service coverage for new and/or used equipment financing due to previous operating difficulties.
The Situation:
This manufacturing borrower had a long history of successful operations with annual revenues running just under $20 million. The company suffered mightily from the effects of September 11, and was forced to close two of its three manufacturing locations and consolidate operations in the remaining plant.
The company had significant operating losses and deterioration of net worth. The company’s existing lender then sold the manufacturer’s distressed senior debt to a third party investor. The company had an immediate need for capital to arrange an accommodation with the investor, but could not provide debt service coverage to attract new equipment financing.
The Equipment Financing:
LMC arranged new Equipment Financing with the following attributes:
- Loan Amount: $2.6 Million
- Equipment Financed: Manufacturing Equipment Located in Borrower’s Plant
- Loan Term: One Year
- Loan To Value: Percentage of Liquidation Value of Equipment Financed
- Collateral: 1st Position Lien on Equipment Financed
- Payments: Monthly Principal and Interest Payments
- Prepayment Penalty: Yes; Six Months Minimum Interest Obligation
- Personal Guarantees: None
- Debt Service Coverage: Not Required
If you need equipment financing, please contact us to discuss your requirements. We have many different programs available that can be tailored to satisfy the specifics of your situation.