CA2287796A1 - Financing method and financial structure - Google Patents
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- CA2287796A1 CA2287796A1 CA 2287796 CA2287796A CA2287796A1 CA 2287796 A1 CA2287796 A1 CA 2287796A1 CA 2287796 CA2287796 CA 2287796 CA 2287796 A CA2287796 A CA 2287796A CA 2287796 A1 CA2287796 A1 CA 2287796A1
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Abstract
A financing method and financial structure is provided for funding development of products where a purchaser has contractually agreed to purchase a quantity of that product, at agreed pricing for an agreed term. The supplier sells the assets required to produce the product to a financing entity who then implements a lease of those assets back to the supplier. The lease amount received by the supplier can substantially offset the development costs, removing the impact of these costs from the balance sheet of the supplier. The lease can also provides interest-only payments for a first term, wherein full production of the product is not yet occurring and interest and principal payments for a second term wherein full production is occurring and larger revenues are being received to fund the larger lease payments. The financing entity can be the combination of a leasing entity and a lending entity to fund the lease entity, or it can be a lending entity who has sufficient leasing expertise.
Description
Financing Method And Financial Structure FIELD OF THE INVENTION
The present invention relates to a financing method and to a financial structure.
More specifically, the present invention relates to a financing method and a financial structure for the development and sales of products which provides flexibility in tax and balance sheet planning for a corporation.
BACKGROUND OF THE INVENTION
Many corporations develop products at their own expense, which expense is recouped through sales of the product developed. In some industries, such as the automotive parts industry and others, a purchaser will contract with a supplier to develop and supply a needed product. Typically, no fees are paid by the purchaser for the development of the product, but a commitment is made to the supplier by the purchaser that a minimum quantity of the product will be purchased at an agreed price over an agreed period. The supplier then effectively recovers the development costs in its margin on the products sold over the contract period.
In a simple example, an automotive parts supplier can receive a request from a purchaser to develop an automotive starter motor for a new automobile model to be introduced by the purchaser. The purchaser will commit to buy 10,000 starter motors each year, starting in the next year, for five years. The supplier will determine the contemplated development costs for the motor, for example $1,000,000, and will determine the unit cost of producing the starter motors over the lifetime of the contract, including the accrued development costs, to obtain a per unit cost, for example $65. If the unit cost is acceptable to the purchaser, a purchase contract, defining the purchaser's buying obligations, and often a development contract defining the requirements for the new starter motor, are signed and development of the new motor begins.
While this development method and structure has proven to be efficient and practical, it does suffer from some disadvantages. For example, the supplier must finance the outlay of development costs for the new product, with the intent of recovering these costs over the lifetime of the purchase contract, which is typically many years. Therefore, the supplier's balance sheet will show a possibly significant expenditure for the development costs in one reporting period but for which the offsetting revenue will be received over a multi-year term.
Thus, despite the fact that the supplier has a profitable mufti-year sales contract in hand, in the first reporting period (typically a fiscal year) the supplier's balance sheet reflects the entire outlay of development expenses and, at best, a portion of the income from product sales, and therefore incorrectly reflects a poor financial performance for the supplier.
Further, as the supplier's income will be depressed due to the expenditure of the development costs in one year (while the income from the sales which results from these developments is spread over many years), the supplier can be prevented from benefiting from tax loss carryovers from previous years. If such carryovers are due to expire, the supplier can altogether lose the benefit of such carryovers.
SUMMARY OF THE INVENTION
It is an object of the present invention to provide a novel financing method and financial structure which obviates or mitigates at least some of the above-identified disadvantages of the prior art.
According to a first aspect of the present invention, there is provided a method of financing the development of a product by a product supplier, for which the development costs are to be recovered from supply of said product to a purchaser over a contractually agreed term, comprising the steps of:
(i) determining a set of assets owned by said product supplier and required for the development and sales of said product;
(ii) determining a value for said determined set of assets and transferring said determined set of assets from said supplier to a financing entity at said determined price;
(iii) said product supplier leasing from said financing entity said determined set of assets, the term of said lease being less than said contractually agreed term;
(iv) said product supplier making interest-only payments on said lease for a first period mutually agreed with said financing entity; and (v) said product supplier making interest and principle payments on said lease for a second mutually agreed period with said financing entity, said second period being longer than said first period and the sum of said first and second periods being less than said contractually agreed term.
According to another aspect of the present invention, there is provided a financing structure to finance development of a product by a product supplier for which the development costs are to be recovered from supply of said product to a purchaser over a contractually agreed term, the structure comprising:
an assignment to a financing entity of a determined set of assets owned by said supplier and required to produce said product; and a lease from said financing entity to said supplier of said determined set of assets, said lease having a first period agreed by said supplier and said financing entity in which interest-only payments are made by said supplier and a second period agreed by said supplier and said financing entity in which interest and principal payments are made by said supplier and a term of less than said contractually agreed term.
The present invention provides a novel financing method and financial structure for funding development of products where a purchaser has contractually agreed to purchase a quantity of that product, at agreed pricing for an agreed term. The supplier sells the assets required to produce the product to a financing entity who then implements a lease of those assets back to the supplier. Preferably, the lease features interest-only payments for a first term and interest and principal payments for a second term. Also, the term of the lease is generally less than the contractually agreed term.
BRIEF DESCRIPTION OF THE DRAWINGS
Preferred embodiments of the present invention will now be described, by way of example only, with reference to the attached Figures, wherein:
Figure 1 shows a block diagram of the parties in a first embodiment of the present invention;
Figure 2 shows the block diagram of Figure 1 indicating the sale and leaseback of assets between the parties;
The present invention relates to a financing method and to a financial structure.
More specifically, the present invention relates to a financing method and a financial structure for the development and sales of products which provides flexibility in tax and balance sheet planning for a corporation.
BACKGROUND OF THE INVENTION
Many corporations develop products at their own expense, which expense is recouped through sales of the product developed. In some industries, such as the automotive parts industry and others, a purchaser will contract with a supplier to develop and supply a needed product. Typically, no fees are paid by the purchaser for the development of the product, but a commitment is made to the supplier by the purchaser that a minimum quantity of the product will be purchased at an agreed price over an agreed period. The supplier then effectively recovers the development costs in its margin on the products sold over the contract period.
In a simple example, an automotive parts supplier can receive a request from a purchaser to develop an automotive starter motor for a new automobile model to be introduced by the purchaser. The purchaser will commit to buy 10,000 starter motors each year, starting in the next year, for five years. The supplier will determine the contemplated development costs for the motor, for example $1,000,000, and will determine the unit cost of producing the starter motors over the lifetime of the contract, including the accrued development costs, to obtain a per unit cost, for example $65. If the unit cost is acceptable to the purchaser, a purchase contract, defining the purchaser's buying obligations, and often a development contract defining the requirements for the new starter motor, are signed and development of the new motor begins.
While this development method and structure has proven to be efficient and practical, it does suffer from some disadvantages. For example, the supplier must finance the outlay of development costs for the new product, with the intent of recovering these costs over the lifetime of the purchase contract, which is typically many years. Therefore, the supplier's balance sheet will show a possibly significant expenditure for the development costs in one reporting period but for which the offsetting revenue will be received over a multi-year term.
Thus, despite the fact that the supplier has a profitable mufti-year sales contract in hand, in the first reporting period (typically a fiscal year) the supplier's balance sheet reflects the entire outlay of development expenses and, at best, a portion of the income from product sales, and therefore incorrectly reflects a poor financial performance for the supplier.
Further, as the supplier's income will be depressed due to the expenditure of the development costs in one year (while the income from the sales which results from these developments is spread over many years), the supplier can be prevented from benefiting from tax loss carryovers from previous years. If such carryovers are due to expire, the supplier can altogether lose the benefit of such carryovers.
SUMMARY OF THE INVENTION
It is an object of the present invention to provide a novel financing method and financial structure which obviates or mitigates at least some of the above-identified disadvantages of the prior art.
According to a first aspect of the present invention, there is provided a method of financing the development of a product by a product supplier, for which the development costs are to be recovered from supply of said product to a purchaser over a contractually agreed term, comprising the steps of:
(i) determining a set of assets owned by said product supplier and required for the development and sales of said product;
(ii) determining a value for said determined set of assets and transferring said determined set of assets from said supplier to a financing entity at said determined price;
(iii) said product supplier leasing from said financing entity said determined set of assets, the term of said lease being less than said contractually agreed term;
(iv) said product supplier making interest-only payments on said lease for a first period mutually agreed with said financing entity; and (v) said product supplier making interest and principle payments on said lease for a second mutually agreed period with said financing entity, said second period being longer than said first period and the sum of said first and second periods being less than said contractually agreed term.
According to another aspect of the present invention, there is provided a financing structure to finance development of a product by a product supplier for which the development costs are to be recovered from supply of said product to a purchaser over a contractually agreed term, the structure comprising:
an assignment to a financing entity of a determined set of assets owned by said supplier and required to produce said product; and a lease from said financing entity to said supplier of said determined set of assets, said lease having a first period agreed by said supplier and said financing entity in which interest-only payments are made by said supplier and a second period agreed by said supplier and said financing entity in which interest and principal payments are made by said supplier and a term of less than said contractually agreed term.
The present invention provides a novel financing method and financial structure for funding development of products where a purchaser has contractually agreed to purchase a quantity of that product, at agreed pricing for an agreed term. The supplier sells the assets required to produce the product to a financing entity who then implements a lease of those assets back to the supplier. Preferably, the lease features interest-only payments for a first term and interest and principal payments for a second term. Also, the term of the lease is generally less than the contractually agreed term.
BRIEF DESCRIPTION OF THE DRAWINGS
Preferred embodiments of the present invention will now be described, by way of example only, with reference to the attached Figures, wherein:
Figure 1 shows a block diagram of the parties in a first embodiment of the present invention;
Figure 2 shows the block diagram of Figure 1 indicating the sale and leaseback of assets between the parties;
Figure 3 shows the block diagram of Figure 1 indicating the cashflows which occur between the parties;
Figure 4 shows a schematic representation of a cashflow of a supplier party;
and Figure 5 shows a block diagram of the parties in a second embodiment of the present invention.
DETAILED DESCRIPTION OF THE INVENTION
A financing method and financial structure, in accordance with a first embodiment of the present invention, involves at least three principle parties, as indicated in block diagram form in Figure 1. A manufacturing/supplier party is indicated at 24, a leasing party is indicated at 28 and a lending party is indicated at 32.
In the following discussion, an example of the present invention will be described wherein supplier party 24 is an automotive parts manufacturer, leasing party 28 is an equipment leasing company and lending party 32 is a bank. It will be apparent to those of skill in the art that the present invention is not limited to this make-up of parties and any or all of these parties can be substituted with any other party that can serve in the same or a similar capacity.
In Figure 1, supplier party 24 has received a development contract 36 and a production supply contract 40 from a purchaser, not shown. Development contract 36 defines the requirements of a product which the purchaser wishes to have supplier party 24 develop. Supply contract 40 defines the purchase commitments of the purchaser, including pricing, minimum volumes and the minimum term of the contract. Development contract 36 will typically result in supplier party 24 incurring significant expenses to produce a set of product development assets 44, which include engineering and development work, drawings, prototypes, intellectual property -registered or otherwise - and production tooling.
As mentioned above, often development contracts do not provide any direct payment to a supplier for the incurred expenses. These expenses are typically incurred within a financial reporting period, such as a fiscal year, and the method and structure of the present invention can be employed to refund much if not all of those incurred expenses to supplier party 24 -$-before the end of the reporting period. Thus, the development expenditure does not appear on the balance sheet of supplier party 24 without the recovery of the bulk of those expenditures in the same reporting period, as described below.
In the present invention, development assets 44 produced by the supplier are valued at a financial value agreed with the leasing party 28 and lending party 32. A
set of assets 46, including development assets 44, production contract 40 and development contract 36 (if it exists), are then assigned and/or licensed, through leasing party 28, to lending party 32 by supplier party 24 for the agreed value, as indicated in Figure 2.
Specifically, ownership of the tangible assets of development assets 44, such as the engineering materials, prototypes and production tooling are assigned to lending party 32.
Contracts 36 and 40 are also assigned to lending party 32, for the term of the contracts. In all cases, it is contemplated that production contract 40 will be assigned to lending party 32. It is also contemplated that, in some circumstances, no development contract 36 may exist and this will not prevent implementation of the financing method or structure. Development assets 44 include all necessary assets to produce the product, including intellectual property rights such as patents, know how, trade secrets, copyrights, etc. whose use are required to produce the product. These intellectual property rights can be specific to the product, i.e. - a patent that relates to specific aspects of the specific product, or can be broad-based, i.e. - a patent that relates to aspects held by supplier party 24 before performing development work under contract 36. These intellectual property components of development assets 44 are licensed to lending party 32 and these licenses are transferable from lending party 32 to another supplier party (not shown) if supplier party 24 experiences a defined default of the structure, as discussed below.
The license of the intellectual property rights, included in assets 44, is exclusive to the lending party 32, to the extent that the intellectual property is used for producing the product in question. For example, it may be that supplier party 24 holds a patent for a broad-based aspect of automotive starter motors that are used in a variety of makes and model of automobiles. The license included in assets 44 will grant the lending party 32 exclusive rights to use that broad-based aspect only with respect to the production of the specific product of contract 40, but will not restrict supplier party 24 from manufacturing other starter motors not included within the scope of production contract 40 that also use the broad-based aspect. Thus, lending party 32 has, exclusively, all rights needed to fulfil production contract 40 and, should lending party 32 be forced to realize on its security in assets 44 due to a default by supplier party 24, production contract 40 and the necessary rights can be sold or otherwise transferred to another supplier who will then have the exclusive ability to fulfil production contract 40.
The exclusivity provisions of the license of intellectual property rights to lending party 32 subsist for an agreed term, usually ten years, which can be longer than the term of production contract 40. At the end of the agreed term, the exclusivity provisions are terminated.
As set of assets 46 are transferred to lending party 32, leasing party 28 initiates a sale/leaseback of assets 46, including production contract 40, to supplier party 24, as indicated by arrow 48 in Figure 2. The sale provides income to supplier party 24 to offset the development costs associated with development contract 36.
The lease is preferably written as requiring interest-only lease payments for a first period of the lease, usually the first year, to allow supplier party 24 time to commence full production and receipt of payment for delivered product before principle and interest payments must be made, thus effectively accruing the development costs for assets 44 over some portion of the lifetime of production contract 40, whereby the actual sales of product can be used to fund the lease payments.
The lease is typically written with a term equal to the length of the production contract, less a period of six months, and a residual value of somewhere over 10% of the lease amount. In the embodiment of Figures 1 and 2, the lease between supplier party 24 and lease party 28 is assigned to lending party 32, by way of an absolute assignment, as indicated by arrow 52 and lending party 32 funds the lease through leasing party 28.
Figure 3 shows the resulting cash flows between supplier party 24, lease party and lending party 32. The lease amount is provided to supplier party 24, from leasing party 28, as is indicated by arrow 56 and leasing party 28 is funded by lending party 32 as indicated by arrow 60. Supplier party 24 makes monthly payments, indicated by arrow 64, to leasing party 28, who in _7_ turn make monthly payments, indicated by arrow 68, to lending party 32.
Typically, the lease is written by the leasing party based on the cost of funds from lending party 32 plus a margin (such as 150 basis points) for leasing party 28 and the monthly payments 68 from leasing party 28 to lending party 32 exclude the margin retained by the leasing party 28.
At the end of the term of the lease, supplier party 24 has the option to return assets 44 to lending party 32, to make a one time payment in full of the residual amount or to continue to make monthly lease payments. In the event that supplier party 44 elects to return assets 44 to lending party 32, lending party 32 can sell, lease or otherwise transfer assets 44 to another supplier party (not shown) who can fulfil production for the remaining balance of the production contract, and for any period in addition to this contractual period. Similarly, should supplier party 24 default on the terms of the lease, lending party 32 can sell, lease or otherwise transfer assets 44 to another supplier party (not shown) to fulfil production for the remaining balance of the production contract and perhaps longer.
Figure 4 shows a possible cash flow of a supplier party 24 for a use of the present invention. In the Figure, cash outlays 100 represent development funds spent by supplier party 24 to produce set of assets 46. The sale of assets 44 to lending party 32, through leasing party 28, results in cash inflow 104 which substantially offsets outlays 100. Assuming that the financial reporting period for supplier party 24 ends shortly after cash inflow 104, the development efforts can be seen to be substantially cash flow neutral to supplier party 24.
Cash outlays 108 represent the interest-only lease payments in the agreed period of the lease, such as the first year of the lease. The cash inflows and outflows 112 indicate the funds received from sales of the product (the inflows), when production is occurring, and the principle and interest lease payments (the outflows).
In the embodiment described above, a lending party 32 and a leasing party 28 are involved in the structure as it is contemplated that leasing party 28 can bring specific lease expertise to the structure.
_g_ Figure 5 shows another embodiment of the present invention, wherein like components to those of the previous embodiment are indicated with like reference numbers, and wherein a lending party 32' has the necessary leasing expertise and the structure and method are implemented without a leasing party 28. Specifically, as shown in the Figure, the sale leaseback 48' is effected between supplier party 24 and lending party 32'. Lending party 32' advances the lease amount 56' direct to supplier party 24 and monthly lease payments 64' are made direct to lending party 32' by supplier party 24.
The above-described embodiments of the invention are intended to be examples of the present invention and alterations and modifications may be effected thereto, by those of skill in the art, without departing from the scope of the invention which is defined solely by the claims appended hereto.
Figure 4 shows a schematic representation of a cashflow of a supplier party;
and Figure 5 shows a block diagram of the parties in a second embodiment of the present invention.
DETAILED DESCRIPTION OF THE INVENTION
A financing method and financial structure, in accordance with a first embodiment of the present invention, involves at least three principle parties, as indicated in block diagram form in Figure 1. A manufacturing/supplier party is indicated at 24, a leasing party is indicated at 28 and a lending party is indicated at 32.
In the following discussion, an example of the present invention will be described wherein supplier party 24 is an automotive parts manufacturer, leasing party 28 is an equipment leasing company and lending party 32 is a bank. It will be apparent to those of skill in the art that the present invention is not limited to this make-up of parties and any or all of these parties can be substituted with any other party that can serve in the same or a similar capacity.
In Figure 1, supplier party 24 has received a development contract 36 and a production supply contract 40 from a purchaser, not shown. Development contract 36 defines the requirements of a product which the purchaser wishes to have supplier party 24 develop. Supply contract 40 defines the purchase commitments of the purchaser, including pricing, minimum volumes and the minimum term of the contract. Development contract 36 will typically result in supplier party 24 incurring significant expenses to produce a set of product development assets 44, which include engineering and development work, drawings, prototypes, intellectual property -registered or otherwise - and production tooling.
As mentioned above, often development contracts do not provide any direct payment to a supplier for the incurred expenses. These expenses are typically incurred within a financial reporting period, such as a fiscal year, and the method and structure of the present invention can be employed to refund much if not all of those incurred expenses to supplier party 24 -$-before the end of the reporting period. Thus, the development expenditure does not appear on the balance sheet of supplier party 24 without the recovery of the bulk of those expenditures in the same reporting period, as described below.
In the present invention, development assets 44 produced by the supplier are valued at a financial value agreed with the leasing party 28 and lending party 32. A
set of assets 46, including development assets 44, production contract 40 and development contract 36 (if it exists), are then assigned and/or licensed, through leasing party 28, to lending party 32 by supplier party 24 for the agreed value, as indicated in Figure 2.
Specifically, ownership of the tangible assets of development assets 44, such as the engineering materials, prototypes and production tooling are assigned to lending party 32.
Contracts 36 and 40 are also assigned to lending party 32, for the term of the contracts. In all cases, it is contemplated that production contract 40 will be assigned to lending party 32. It is also contemplated that, in some circumstances, no development contract 36 may exist and this will not prevent implementation of the financing method or structure. Development assets 44 include all necessary assets to produce the product, including intellectual property rights such as patents, know how, trade secrets, copyrights, etc. whose use are required to produce the product. These intellectual property rights can be specific to the product, i.e. - a patent that relates to specific aspects of the specific product, or can be broad-based, i.e. - a patent that relates to aspects held by supplier party 24 before performing development work under contract 36. These intellectual property components of development assets 44 are licensed to lending party 32 and these licenses are transferable from lending party 32 to another supplier party (not shown) if supplier party 24 experiences a defined default of the structure, as discussed below.
The license of the intellectual property rights, included in assets 44, is exclusive to the lending party 32, to the extent that the intellectual property is used for producing the product in question. For example, it may be that supplier party 24 holds a patent for a broad-based aspect of automotive starter motors that are used in a variety of makes and model of automobiles. The license included in assets 44 will grant the lending party 32 exclusive rights to use that broad-based aspect only with respect to the production of the specific product of contract 40, but will not restrict supplier party 24 from manufacturing other starter motors not included within the scope of production contract 40 that also use the broad-based aspect. Thus, lending party 32 has, exclusively, all rights needed to fulfil production contract 40 and, should lending party 32 be forced to realize on its security in assets 44 due to a default by supplier party 24, production contract 40 and the necessary rights can be sold or otherwise transferred to another supplier who will then have the exclusive ability to fulfil production contract 40.
The exclusivity provisions of the license of intellectual property rights to lending party 32 subsist for an agreed term, usually ten years, which can be longer than the term of production contract 40. At the end of the agreed term, the exclusivity provisions are terminated.
As set of assets 46 are transferred to lending party 32, leasing party 28 initiates a sale/leaseback of assets 46, including production contract 40, to supplier party 24, as indicated by arrow 48 in Figure 2. The sale provides income to supplier party 24 to offset the development costs associated with development contract 36.
The lease is preferably written as requiring interest-only lease payments for a first period of the lease, usually the first year, to allow supplier party 24 time to commence full production and receipt of payment for delivered product before principle and interest payments must be made, thus effectively accruing the development costs for assets 44 over some portion of the lifetime of production contract 40, whereby the actual sales of product can be used to fund the lease payments.
The lease is typically written with a term equal to the length of the production contract, less a period of six months, and a residual value of somewhere over 10% of the lease amount. In the embodiment of Figures 1 and 2, the lease between supplier party 24 and lease party 28 is assigned to lending party 32, by way of an absolute assignment, as indicated by arrow 52 and lending party 32 funds the lease through leasing party 28.
Figure 3 shows the resulting cash flows between supplier party 24, lease party and lending party 32. The lease amount is provided to supplier party 24, from leasing party 28, as is indicated by arrow 56 and leasing party 28 is funded by lending party 32 as indicated by arrow 60. Supplier party 24 makes monthly payments, indicated by arrow 64, to leasing party 28, who in _7_ turn make monthly payments, indicated by arrow 68, to lending party 32.
Typically, the lease is written by the leasing party based on the cost of funds from lending party 32 plus a margin (such as 150 basis points) for leasing party 28 and the monthly payments 68 from leasing party 28 to lending party 32 exclude the margin retained by the leasing party 28.
At the end of the term of the lease, supplier party 24 has the option to return assets 44 to lending party 32, to make a one time payment in full of the residual amount or to continue to make monthly lease payments. In the event that supplier party 44 elects to return assets 44 to lending party 32, lending party 32 can sell, lease or otherwise transfer assets 44 to another supplier party (not shown) who can fulfil production for the remaining balance of the production contract, and for any period in addition to this contractual period. Similarly, should supplier party 24 default on the terms of the lease, lending party 32 can sell, lease or otherwise transfer assets 44 to another supplier party (not shown) to fulfil production for the remaining balance of the production contract and perhaps longer.
Figure 4 shows a possible cash flow of a supplier party 24 for a use of the present invention. In the Figure, cash outlays 100 represent development funds spent by supplier party 24 to produce set of assets 46. The sale of assets 44 to lending party 32, through leasing party 28, results in cash inflow 104 which substantially offsets outlays 100. Assuming that the financial reporting period for supplier party 24 ends shortly after cash inflow 104, the development efforts can be seen to be substantially cash flow neutral to supplier party 24.
Cash outlays 108 represent the interest-only lease payments in the agreed period of the lease, such as the first year of the lease. The cash inflows and outflows 112 indicate the funds received from sales of the product (the inflows), when production is occurring, and the principle and interest lease payments (the outflows).
In the embodiment described above, a lending party 32 and a leasing party 28 are involved in the structure as it is contemplated that leasing party 28 can bring specific lease expertise to the structure.
_g_ Figure 5 shows another embodiment of the present invention, wherein like components to those of the previous embodiment are indicated with like reference numbers, and wherein a lending party 32' has the necessary leasing expertise and the structure and method are implemented without a leasing party 28. Specifically, as shown in the Figure, the sale leaseback 48' is effected between supplier party 24 and lending party 32'. Lending party 32' advances the lease amount 56' direct to supplier party 24 and monthly lease payments 64' are made direct to lending party 32' by supplier party 24.
The above-described embodiments of the invention are intended to be examples of the present invention and alterations and modifications may be effected thereto, by those of skill in the art, without departing from the scope of the invention which is defined solely by the claims appended hereto.
Claims (6)
1. A method of financing the development of a product by a product supplier, for which the development costs are to be recovered from supply of said product to a purchaser over a contractually agreed term, comprising the steps of:
(i) determining a set of assets owned by said product supplier and required for the development and sales of said product;
(ii) determining a value for said determined set of assets and transferring said determined set of assets from said supplier to a financing entity at said determined price;
(iii) said product supplier leasing from said financing entity said determined set of assets, the term of said lease being less than said contractually agreed term;
(iv) said product supplier making interest-only payments on said lease for a first period mutually agreed with said financing entity; and (v) said product supplier making interest and principle payments on said lease for a second mutually agreed period with said financing entity, said second period being longer than said first period and the sum of said first and second periods being less than said contractually agreed term.
(i) determining a set of assets owned by said product supplier and required for the development and sales of said product;
(ii) determining a value for said determined set of assets and transferring said determined set of assets from said supplier to a financing entity at said determined price;
(iii) said product supplier leasing from said financing entity said determined set of assets, the term of said lease being less than said contractually agreed term;
(iv) said product supplier making interest-only payments on said lease for a first period mutually agreed with said financing entity; and (v) said product supplier making interest and principle payments on said lease for a second mutually agreed period with said financing entity, said second period being longer than said first period and the sum of said first and second periods being less than said contractually agreed term.
2. The method of claim 1 wherein said set of assets transferred to said financing entity includes tangible assets which are sold to said financing entity and intellectual property rights which are licensed to said financing entity.
3. The method of claim 1 wherein said financing entity is a leasing entity and wherein said leasing entity is funded for said lease by a lending entity.
4. A financing structure to finance development of a product by a product supplier for which the development costs are to be recovered from supply of said product to a purchaser over a contractually agreed term, the structure comprising:
a transfer to a financing entity of a determined set of assets owned by said supplier and required to produce said product; and a lease from said financing entity to said supplier of said determined set of assets, said lease having a first period agreed by said supplier and said financing entity in which interest-only payments are made by said supplier and a second period agreed by said supplier and said financing entity in which interest and principal payments are made by said supplier and a term of less than said contractually agreed term.
a transfer to a financing entity of a determined set of assets owned by said supplier and required to produce said product; and a lease from said financing entity to said supplier of said determined set of assets, said lease having a first period agreed by said supplier and said financing entity in which interest-only payments are made by said supplier and a second period agreed by said supplier and said financing entity in which interest and principal payments are made by said supplier and a term of less than said contractually agreed term.
5. The financing structure of claim 4 wherein said transfer includes a sale of tangible assets and a license of intellectual property rights.
6. The financial structure of claim 4 wherein said financing entity is a leasing entity and further including an absolute assignment of said lease from said leasing entity to a lending entity, said lending entity funding said leasing entity for said lease.
Priority Applications (1)
| Application Number | Priority Date | Filing Date | Title |
|---|---|---|---|
| CA 2287796 CA2287796A1 (en) | 1999-10-29 | 1999-10-29 | Financing method and financial structure |
Applications Claiming Priority (1)
| Application Number | Priority Date | Filing Date | Title |
|---|---|---|---|
| CA 2287796 CA2287796A1 (en) | 1999-10-29 | 1999-10-29 | Financing method and financial structure |
Publications (1)
| Publication Number | Publication Date |
|---|---|
| CA2287796A1 true CA2287796A1 (en) | 2001-04-29 |
Family
ID=4164519
Family Applications (1)
| Application Number | Title | Priority Date | Filing Date |
|---|---|---|---|
| CA 2287796 Abandoned CA2287796A1 (en) | 1999-10-29 | 1999-10-29 | Financing method and financial structure |
Country Status (1)
| Country | Link |
|---|---|
| CA (1) | CA2287796A1 (en) |
Cited By (1)
| Publication number | Priority date | Publication date | Assignee | Title |
|---|---|---|---|---|
| CN113204946A (en) * | 2021-04-28 | 2021-08-03 | 万翼科技有限公司 | Data control method, device, equipment and storage medium |
-
1999
- 1999-10-29 CA CA 2287796 patent/CA2287796A1/en not_active Abandoned
Cited By (2)
| Publication number | Priority date | Publication date | Assignee | Title |
|---|---|---|---|---|
| CN113204946A (en) * | 2021-04-28 | 2021-08-03 | 万翼科技有限公司 | Data control method, device, equipment and storage medium |
| CN113204946B (en) * | 2021-04-28 | 2024-03-12 | 万翼科技有限公司 | Data control method, device, equipment and storage medium |
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