STRUCTURED
FINANCE

At Liberty, we get that every deal is different, requires custom design and delivery deadlines.

Liberty's Structured Financing Solutions encompass a wide array of innovative structures with each solution tailored to the unique short and long-term business objectives of our clients. And while each deal is different, all of our solutions have a common core set of features and benefits which includes: 

  • Financing for new and used equipment regardless of asset class
  • Competitively priced fixed rate financing options
  • Flexible payment options that help to mitigate cash flow concerns
  • Strategies to overcome capital budget restrictions or banking convenants
  • Ability to match rental payments to the asset's anticipated incremental revenue 
  • Full service, superior customer service
  • Transparent, trust-worthy end-of-term options 
  • Solutions based on your business goals; not your industry woes

At Liberty, we bring to bear the full-force of our combined 135+ years of deep transactional knowledge to offer innovative and collaborative structured solutions for your unique business needs.

LIBERTY OFFERS A VARIETY OF SOLUTIONS

from simple to sophisticated, we create and clarify all

Fair Market Value (FMV) Operating Leases gives you the flexibility to spread out the cost of equipment over time, conserving your valuable cash flow. Liberty's Operating Lease payments can also be structured to include stretch, skip and step payments to match revenues with expenses for seasonal -based businesses. In addition, you avoid the obsolescence costs (technology upgrades/updates to existing equipment, disposal costs, etc) and are able to re-invest on cutting-edge technology with new equipment.

With lower up-front costs, lower monthly payments, tax advantages and up to 100% financing including “soft costs” (transportation, delivery, installation and other deferred costs), Liberty's Operating Leases function as a key component of any smart, strategic CapEx plan.

A first amendment lease is a mix between a capital lease and an operating lease. For accounting purposes, a first amendment lease is treated as a capital lease allowing the lessee to depreciate the equipment on their financial statements thereby maximizing EBITDA. However, first amendment leases are treated the same as Operating Leases by the IRS allowing the Lessor to depreciate the equipment on their tax returns and pass a lower effective interest rate on to the Lessee.

First Amendment Leases have fixed purchase prices at the end of the lease allowing the lessee to purchase the asset at a set amount with no penalty OR continue leasing for another year and then hand it back to the Lessor; effectively allowing the Lessee to defer the ownership decision until the end of the lease term when they will have a better sense of whether or not they want to own the equipment long term.

This lease structure functions like a purchase, but gives you the chance to spread out the cost of your equipment over several years, allowing your company to hold onto its cash.

A Capital Lease is a contract in which Liberty gives you the exclusive right to use and possess its property or equipment (the “Leased Property” or “Leased Equipment”) for a specified period. Liberty's Capital Leases have a $1 purchase option at the end of the lease, an attractive option for those wishing to retain ownership and improve liquidity in the same transaction.

A TRAC (terminal rental adjustment clause) lease is a tax-oriented lease of qualified motor vehicles and trailers. A TRAC lease permits or requires an adjustment of rentals according to the amount realized by the lessor upon a sale of the leased equipment. At end-of-term, you have the option to:

  1. Purchase the equipment at the end of term at a pre-determined residual (purchase value) agreed to at commencement of the lease, or
  2. Opt to continue to lease the equipment at a reduced rate with payments based on the residual value amount (the higher your residual, the lower your monthly payments, and vice versa), or
  3. Simply return the equipment to Liberty.

Similarly, a Split-TRAC Lease follows the same principle as a TRAC Lease except the Lessee’s potential lease-end exposure is limited to a portion of the Estimated Residual Value.

Liberty's deep structuring expertise enables clients to consider more complex synthetic leasing options. Competitively priced despite its complexity, this type of financing enhances financial performance ratios and up to 100% expensing opportunities which may spur some taxpaying companies to seek synthetic lease treatment for qualifying assets so that, as the tax owner and the lessee, they may claim the full expensing under the 2017 Tax Cuts and Jobs Act.

While synthetic leasing will not be as common as many other types of lease facilities, it does provide a good alternative for companies that are interested in a method to keep lease payments low during the lease term, depreciate the asset for U.S. federal tax purposes and have the ability to acquire the asset.

 

 

The services provide a general summary of their associated features and benefits. It is not intended to be and should not be relied upon as a legally-binding document. As with all financial structures and documents, we advise that all our clients consult with their tax and legal advisers.

MANAGEMENT TRACK RECORD

at a glance

+
5,000

DEALS CLOSED
TO DATE

$
2,500,000,000

IN FUNDED
TRANSACTIONS

+
135

YEARS OF COMBINED
EXPERIENCE