SOURCES OF FINANCE

1
SOURCES OF FINANCE

• MEDIUM
• Term Loans
• Leasing  
• - Operating
• - Financial
• - Sale and Leaseback
• Hire Purchase

2
MEDIUM SOURCES (con)

• Term Loans
• - nature and flexibility
• - interest rate charges
• - term loan agreements
• - preparing a term loan

3
MEDIUM SOURCES (con)

• Leasing
• - definition and development
• - types of leases
• Hire Purchase
• - types of Agreements
• - nature of Agreements
• - extent in Ireland

4
SOURCES OF FINANCE

• LONG TERM
• Debt- Long term loans
• - Debentures
• - Project financingROJECT FINANCING  
• Equity 
• - Owners Capital
• - Depreciation
• - Preference Shares
• - Ordinary Shares    
•  

5
DEBENTURES

• - unsecured- mortgage bonds- guaranteed
  debentures- debentures with a warrant-
  subordinated debentures- junk bonds-
  perpetual debentures- income bonds - indexed
  bonds- zero coupon bonds
• Characteristics - risk, income and control effects

6
DEBT

• Five characteristics
• - maturity- security- repayment provisions-
  interest- denominations Public issues
• - trustee responsibilities
• - to see al legal requirements are met- that
  terms of indenture are met- appropriate action
  in case of default
• New Issues and outstanding issues
• Rating agencies
• Bonds in Ireland
• Debt Equity Ratio
• Times Interest covered  

7
PROJECT FINANCING

• A financing of a particular economic unit in
  which a lender is satisfied to look initially to
  the cash flows and earnings of that economic unit
  as the source of funds from which a loan will be
  repaid and the assets of the economic unit as
  collateral for the loan Characteristics
• Construction and development can take years
• Debt on Balance Sheet would distort financial
  strength of the company
• Any one financial institution could hardly afford
  the risk attaching to such loans

8
OWNERS CAPITAL AND DEPRECIATION

• Importance
• Opportunity cost
• Depreciation    

9
PREFERENCE SHARES

• - straight preference shares- cumulative
  preference shares- redeemable preference
  shares- participating preference shares-
  convertible preference shares- export
  preference shares

10
ORDINARY SHARES

• - Ownership- Income - Issuing new
  shares- Going public- Deferred shares  

11
EQUITY FINANCING

• STAGES
• Early Stage
• - seed - start-up - other early stage
• Expansion
• - venture
• Later Stage
• - ongoing
• Venture Capital in Ireland
• BES

12
GOVERNMENT ASSISTANCE

• Grants
• - feasibility
• - capital
• - R D
• - Process development
• - technology transfer  
• Structural Funds
• Enterprise Funds
• Loan Guarantees
• Rent and Interest Subsidies etc