SOURCES OF FINANCE

MEDIUM

• Term Loans

• Leasing  

- Operating

- Financial

- Sale and Leaseback

• Hire Purchase

MEDIUM SOURCES (con)

• Term Loans

- nature and flexibility

- interest rate charges

- term loan agreements

- preparing a term loan

MEDIUM SOURCES (con)

• Leasing

- definition and development

- types of leases

• Hire Purchase

- types of Agreements

- nature of Agreements

- extent in Ireland

SOURCES OF FINANCE

LONG TERM

• Debt

- Long term loans - Debentures - Project financingROJECT FINANCING  

• Equity  - Owner’s Capital - Depreciation - Preference Shares - Ordinary Shares    

 

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

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

 

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

OWNERS CAPITAL AND DEPRECIATION

• Importance

• Opportunity cost

• Depreciation  

 

PREFERENCE SHARES

• - straight preference shares

- cumulative preference shares

- redeemable preference shares

- participating preference shares

- convertible preference shares

- export preference shares

ORDINARY SHARES

- Ownership

- Income 

- Issuing new shares

- Going public

- Deferred shares  

EQUITY FINANCING

STAGES

• Early Stage - seed - start-up - other early stage

• Expansion - venture

• Later Stage - ongoing

• Venture Capital in Ireland

• BES

GOVERNMENT ASSISTANCE

• Grants

- feasibility - capital - R & D - Process development - technology transfer  

• Structural Funds

• Enterprise Funds

• Loan Guarantees

• Rent and Interest Subsidies etc