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Sale and Lease back of existing equipment

1.Product features

A company owns equipment that has not been mortgaged. The business is able to get financing by selling the equipment first and then renting it back.

2.Product profile

If a company (the lessee) owns production equipment or other big equipment that has not been mortgaged, it may make application to China Huarong Financial Leasing (the lessor) to sell the equipment to the lessor at a reasonable price and then sign an agreement to rent the equipment back from the lessor. During the lease term, the lessee pays rent to the lessor. After the expiration of the lease term, the equipment is owned by the lessee.

3.Applicable area

Production lines, complete equipment, a series of equipments or individual equipment, cars, ships, airplanes and other transportation facilities are owned by a company legally and are not mortgaged. But the company lack working capital or fund for new investment projects.

4. Advantages and functions

(1)The nature of the equipment is not changed. The equipment is still used by the lessee.

(2)The lessor pays the price for equipment assignment in a lump sum. The lessee can get a big cash flow to solve its capital liquidity problem.

(3) The lessee can use the fund received from selling the equipment to invest in a new project, which can help the lessee to catch good investment opportunities.

(4) If the equipment appreciates, the lessee can sell the equipment at the fair value and will get more capital.

(5) The lease term is flexible within the original service years of the equipment upon the negotiation. The lessee can use the rent to adjust the production cost, which will have a better tax saving or postponing result.

(6) After the lessee pays up the contracted rent, the lessee takes back the ownership of the equipment again.