Structures
We provide flexible capital solutions in four primary avenues.
Newly Constructed Equipment Capital or Finance Lease
Equipment leases provide customers the opportunity to finance newly built core operating assets and equipment over 3 – 10 years, with the ability to repurchase the asset at the end of the lease term. These structures are typically fully amortizing, with nominal residual value at term-end.
Key Characteristics
Key Characteristics
Applicability:
- Customers seeking to finance new build equipment who want to avoid the full upfront capital cost and preserve balance sheet and cash flow flexibility
Sample asset types:
- Gas compression packages
- Power generation equipment
- Process equipment
- Oil & gas batteries
- Water handling facilities
- Industrial / heavy equipment
Payment:
Fixed monthly payment that is a blend of interest and principal for a “mortgage-style” amortization schedule
Details:
New equipment garners the highest lease-to-value (“LTV”) amount. Buyback value is typically a nominal, pre-agreed amount (e.g., $1); a higher guaranteed residual payment can also be structured if preferred.
Asset Sale-Leasebacks
Asset Sale-Leasebacks (ASLs) allow customers to unlock capital from core operating assets and equipment they currently own, refinancing them over 3 – 10 years with the ability to repurchase the asset at the end of the lease term. Like a capital lease, these structures are typically fully amortizing, with nominal residual value at term-end. Customers with equity in existing equipment who are seeking to free up capital, while retaining a path to ownership, prefer this structure. Northbase transacts directly with the supplier of the equipment.
Key Characteristics
Applicability:
- Customers with existing operating equipment seeking to unlock capital for other uses or repay existing debt
- Equipment has residual useful life greater than the desired lease term
Sample asset types:
- Gas compression packages
- Power generation equipment
- Process equipment
- Oil & gas batteries
- Water handling facilities
- Industrial / heavy equipment
Payment:
Fixed monthly payment that is a blend of interest and principal for a “mortgage-style” amortization schedule, based on the appraised value of the asset at sale
Details:
Used equipment garners a slightly lower lease-to-value (“LTV”) compared to newly built / packaged equipment. Proceeds from the sale of the asset are typically advanced upfront as a lump sum directly to the client, with the asset then leased back to the customer; buyback value is typically a nominal, pre-agreed amount (e.g., $1) at the end of the lease term.
Equipment Rentals (Operating Leases)
Rental structures provide customers the flexibility to access necessary equipment on a short-term basis (1 – 3 years), without committing to a purchase upfront or via a long-term lease. These structures may include an optional buyout at the end of term. Customers seeking short-term equipment use, without an ownership obligation at term-end, prefer this structure.
Key Characteristics
Applicability:
- Customers with short-term, temporary, or project-based equipment needs
- Short-term rental solutions (1-3 years) on customarily new equipment, but other structures also available
- Small-to-medium sized assets and equipment with more general specifications
Sample asset types:
- Gas compression packages
- Power generation equipment
- Process equipment
- Industrial / heavy equipment
Payment:
Fixed monthly rental fee
Details:
Terms are typically shorter and an optional buyout may be available at the end of the rental term. Northbase either solicits equipment on behalf of customer (and funds directly to supplier) or purchases from customer.
Construction & Progress Payment Financing (WIP)
A WIP structure provides customers with capital to fund equipment during the construction or fabrication period, prior to completion and delivery, with advances made against agreed-upon progress milestones. This structure allows customers to preserve working capital during the build phase, rather than funding construction costs out of pocket, and typically converts into a permanent financing structure – such as a capital lease – once the asset is completed and placed into service. Customers seeking to bridge the construction period of new equipment, without a large upfront cash outlay, prefer this structure.
Key Characteristics
Applicability:
- Customers constructing or fabricating new equipment who want to avoid funding the build phase out of pocket
Sample asset types:
- Gas compression packages
- Power generation equipment
- Process equipment
- Oil & gas batteries
- Water handling facilities
Payment:
Interim advances disbursed against agreed-upon progress milestones (e.g., engineering complete, materials procured, fabrication complete, delivery); interest-only during the build phase
Details:
Upon completion and delivery, the WIP structure typically converts into a permanent financing structure (capital lease or ASL); term length during the build phase is generally tied to the project’s construction timeline (e.g., 6 – 18 months) rather than a fixed range.