FINANCING SOLUTIONS
GreenCap is able to provide landowners with more than one approach. All of these will be an upfront lump-sum payment secured against the long-term cashflows from the notarial leases. The simplest of transactions is to purchase the lease but in this case there are Tax implications that might or might not be preferred. Another option expounded upon here will be that the lump-sum payment is structured as a loan and royalty agreement for tax-efficiency purposes, but has no downside risk for the leaseholder.
Long term financing
GreenCap is able to take a long-term view on the certainty of the lease revenue attributable to a land owner from a renewable energy project and as such is willing to provide long term financing (more than 10 years or corresponding to the remaining term of the lease agreement) to the lessee against this lease revenue, without any additional security from the land owner.
Tailored financing solution
Each financing solution is tailored for the circumstances of the landowner and would have the following components:
- 10 plus year loan or a loan corresponding to the remaining lease term with an interest rate interest rate linked to South African Prime Rate.
- The lease revenue that the land owner receive from the renewable energy project will be used to repay the loan.
To secure the funding the landowner will only need to pledge the lease revenue from the renewable energy project as security with a simple contract and have no risk of this financing impacting on the owner’s land rights or farming activities.
HOW TO SECURE A GREENCAP FINANCING PRODUCT
GreenCap’s experience is that, subject to the timeously delivery of information by the landowner, it would take 6-8 weeks to complete the funding application by a landowner and execute the funding documents.
- Initial meeting with GreenCap representative
- Execution of NDA between GreenCap and landowner
- Supply of information by landowner
- Initial credit approval and provision of financing offer by GreenCap to landowner
- Acceptance of financing offer by landowner
- Preparation of financing documents by GreenCap
- Comments on funding documents by landowner
- Execution of funding documents between the parties and settlement of funding by GreenCap to the landowner