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Leasing Business
Lease products in the water supply and environmental protection area
1. Product features
If the water supply and environmental protection project of the company needs additional investment or equipment, the companymay buy new equipment through financial lease or realize mid-to-long-term financing by selling existing production equipment, pipes and constructions to the lessor.
2. Product profile
In different stages of the construction of the project, the business is able to resolve capital problem through lease. In the early stage of the project, direct lease will provide the business capital to buy the equipment (facilities). In the middle or late stage of the project, sale and leaseback will help the business to resolve the problem of making the final payment for the engineering. If the project is put into use, the lessee can sell the existing asset through sale and leaseback, which can improve asset liability structure and help the business to make a reasonable tax plan.
Direct lease mode: the company (the lessee), the equipment manufacturer and China Huarong Financial Leasing (the lessor) sign a three-party sale and purchase agreement. The lessee chooses equipment (facilities) and the lessor pays to buy the equipment (facilities). The lessee uses the equipment (facilities). During the lease term, the lessee pays rent to the lessor. After the expiration of the lease term, the equipment (facilities) belongs to the lessee.
sale and leaseback mode: the company (the lessee) uses its production equipment, pipes and constructions which are not mortgaged to make application to China Huarong Financial Leasing (the lessor). It sells the assets to the lessor at a reasonable price and then signs a lease agreement to rent back the equipment (facilities) from the lessor to use. During the lease term, the lessee pays rent to the lessor. After the expiration of the lease term, the equipment belongs to the lessee.
3.Applicable area
A company needs to buy equipment for its new project in water supply, environmental protection and new energy areas including urban water supply, wastewater treatment, solid waste treatment, exhaust gas treatment, wind power generation, solar power generation or has production equipment, pipes and constructions that are not mortgaged but needs to raise money.
4. Advantages and functions
(1)In a new construction project, it can resolve the problem of insufficient fund for purchasing equipment (facilities) when the company has not received the loan for the project in the early stage.
(2)It can increase the overall financing amount. The company can raise money by selling pipes and constructions. It complements with bank financing mode and can improve the asset liability structure and cash flow of the business quickly.
(3)The lessee can use the capital from the completed project to invest in the new project. It can help the business catch opportunities and increase investment scale.
(4)Guarantee, mortgage of other movable property/real property and pledge of payment collection right can be used together flexibly according to the situation of the project. It can help the company to allocate the financing resources.
(5)The lease term is flexible within the service years of the equipment (facilities) upon the negotiation of the lessor and the lessee. The lessee can use the rent to adjust its production cost, which will have a better tax saving or postponing result.
(6)During the lease term, the lessee can keep using the leased asset. After the lessee pays up the contracted rent, it will hold the ownership of the equipment (facilities).
