Sale-leaseback solutions to meet working capital needs

At Maritime Partners, we provide sale-leaseback transactions on any type of vessel across all geographies. A sale-leaseback is a type of transaction that involves an operator selling an asset and immediately leasing the asset back from the purchaser, enabling the operator to free up capital while continuing existing business operations. A specific length of time and a pre-determined payment rate establish the lease structure, providing financial flexibility without hindering processes. Sale-leaseback deals can be a valuable tool for a maritime company, allowing them to avoid conventional financing measures’ restrictive covenants. 

Utilizing sale-leasebacks can be a strategic maneuver that can significantly benefit operators in the following ways: 

Convert equity into cash 

A sale-leaseback allows a seller to access capital that is tied up in asset ownership, which enables a more efficient use of this the capital, such as: addressing operational needs, providing dividends to owners, pursuing new opportunities, and resolving liquidity issues. 

Alternative to traditional financing 

A sale-leaseback is a powerful alternative to conventional financing methods. By employing such a transaction, operators can raise fixed-rate financing at 100% loan-to-value without taking on the burdensome loan covenants associated with traditional financing methods.  

Improves balance sheet and credit standing 

A sale-leaseback can immediately improve an operator’s return on capital by removing a capital inefficient asset from their balance sheet. With the vessel now leased instead of owned, the vessel moves “off-balance sheet”, effectively reducing the company’s loan-to-value ratio. As a result, an operator can rapidly improve their credit metrics. If an operator is struggling to meet existing bank covenants, these transactions can provide an actionable and quick path to covenant compliance.

No downtime or retraining required 

Using a sale-leaseback, the operator immediately has access to the newly leased asset, saving them time and money. Additionally, because the crew is already familiar with the asset, there is no need to retrain your employees on a new piece of equipment, securing further savings for the operator.

Transfer of residual risk 

Operators eliminate the long-term risks associated with the ownership and maintenance of a maritime asset. Once a sale-leaseback transaction is closed, risks like depreciation and obsolescence are entirely borne by Maritime Partners. 

Tax benefits  

Often, a seller in a sale-leaseback can receive tax savings by essentially turning assets into contingent assets. The lease payments become tax-deductible, given that they are business expenses. Please note that this article should not be considered tax advice. Business owners should always consult their CPA or tax attorney before making tax decisions based on a sale-leaseback transaction. 

Please note that this page should not be considered tax advice.