Monetization of Contracts

(401) 525-6544 

An evolving niche-financing tool, termed "monetization financing," is providing strong opportunities for lenders. This financing uniquely facilitates transactions in a broad array of industries and has many significant structural advantages over traditional financing. This financing may also be utilized by what may be considered by traditional finance as a "qualified" borrower as well as an "unqualified" borrower. Completed through an efficient streamlined private placement, monetization financing can provide funding within 30 days. Pension funds and insurance companies are the ultimate investors for private placements insurance companies.

Three significant requirements are needed for a client to utilize monetization financing: 1) an assignment of/or an absolute and unconditional promise to pay from an investment-grade obligor or an acceptable substitute financial instrument backing the transaction, 2) a predictable cash flow, and 3) a date-certain payment. An investment-grade obligor for this program is typically rated by S&P and Moody's with an acceptable rating. There are exceptions and substitutes, however, for these rating criteria. If a company is not rated, there are alternate procedures to qualify said obligor. An obligor is typically a customer or other third party who has contractually agreed to make payments to the client or guarantee payments for the client within a term of 1-30 years. In one sense, monetization financing can be viewed as a longer-term variation of factoring without the high cost and other major differences associated with factoring.

This financing vehicle is differentiated from traditional financing for "unqualified borrowers" in the following categories:

  • Low, competitive, fixed bank interest rates rather than tied to floating prime interest rates;
  • Interest rates are determined by a combination of term of the loan, credit of the obligor and Treasuries at the time of the commitment;

Contract Monetization is an innovative, viable and powerful funding solution that transforms [not loan against] investment grade purchase/sale contracts for product, services or intellectual [software] property ("Contracts") into fixed income instruments, the source of our funding.

Every client is unique  and we create specific financial strategies and tactics, not off the shelf, solutions. We work hand in hand with our clients to understand their business, their strategies and tactics and specific cash and funding needs. We help them develop, re-package or re-format their existing or proposed Contracts into an acceptable investment grade contract that can then be monetized in its entirety or a portion thereof.

With Contract Monetization as an alternate source of non-recourse financing at institutional rates with no equity participation, the net present value of a Contract's long term value is immediately funded to the client to not only maintain current operations, but to expand it.

Gather advanced funding on unconditional, long term (two (2) years or more), "investment grade" (BB or better) contracts (the "Collateral") that include, but is not limited to:                                   

  • Purchase / Sale Contracts for Products, Services
  • Development / Construction Contracts
  • Power Purchase Agreements 
  • Tax Credits 
  • Structured Settlements

Contract Monetization is:

  • Not readily available in the market, Not Asset (Real Estate or Equipment) Based, No Appraisals and Non-recourse to the "Borrower"

Contract Monetization has:

  • Flexible structuring 
  • Expedited Funding - typically within 30 Days after receipt of all requested documents
  • NO Underwriting Fee
  • NO Equity Participation

Collateral should preferably fall under U.S. [law] jurisdiction but must be:

  • Unconditional and absolute
  • In US Dollars 
  • Rated BB or better 
  • Assignable 
  • Sum Certain 
  • Date Certain 
  •  "Off Taker" [entity "paying on/guaranteeing" the Collateral] located in the US - preferred

Underwriting Consideration

  • Collateral meeting funding criteria
  • Credit worthiness of the Off Taker 
  • Length/Term [number of years] of Collateral 
  • Sum Certain Amount [Gross Value of the Collateral]

Lending Amounts / Institutional Rates/ Ratio / Terms: 

  • Minimum loan amount - One Million Dollars ($1,000,000) (USD) 
  • Maximum loan amount - None 
  • Institutional Rate Range, as of January2010 - Seven Percent (7.00%) to Ten Percent (10.00%)
  • Net Present Value of up to One Hundred Percent (100%) of Collateral's Sum Certain amount less nominal processing fees

Correspond with the Collateral terms  

Repayment Schedule:

  • Extremely flexible - principal and interest payments may be structured on a monthly, quarterly, semi-annual or annual basis and can have deferred payments based on the Collateral terms

 

FREQUENTLY ASKED QUESTIONS

 

 Winthrop Financial Solutions, LLC 
1240 Pawtucket Ave, Rumford, RI 02916

Howard L. Weldon

(Direct) 401-525-6544
 (Fax) 888-679-0773
   hweldon301@msn.com