Lease
Purchase Proposal Requests and Analysis
Items for Lessee's consideration
Following are details that will be of interest
to potential equipment lessors in preparing a proposal for
you. Also shown is required information
regarding proposals submitted by lessors that should make
a comparative analysis easier for you, the lessee.
Regarding the equipment
to be financed:
- What is being purchased, its description,
and is the equipment a new addition to an existing
fleet, or is it replacing older equipment.
- Its cost (including applicable sales
tax).
- When will it be delivered, or refinanced.
- Will prepayments be made under the
purchase contract with the vendor for partial or early
deliveries that will allow you to take advantage of
early payment discounts.
- When will any partial or early payments
to vendors be required and in what amounts.
Regarding the lease proposal:
- the lease term in years
- payment timing preferences, annual,
semiannual, etc.
- preferred closing date for the transaction
- will lessee issue more than $10.0 million
in new tax exempt debt in the CALENDAR year in which the
lease will commence.
Information to be included in a lessor's proposal
to assist the lessee in comparing alternatives:
- periodic payment in dollars, and dates
those payments will be due.
- the commencement date for interest accrual
in the lease; (this is very important to keep consistent
in proposals from competing lessors. Interest charges based
on dated dates or the date of a proposal, will result in
interest charges before the lease funding date or the payment
date to the vendor at time of delivery
- will lessor be using an escrow for an
advance funding of the lease, if so, who will benefit from
the escrow earnings on the funds in escrow; (again, this
is very important to keep consistent in proposals from
competing lessors. In some cases lessor's or the escrow
agent may keep the earnings, and they would not be applied
to reduce the financed equipment cost, or reduce lease
payments due.)
- fees applicable to the transaction how
much and how paid. Will they be capitalized in lease.
- if an escrow is utilized, what investment
earnings assumption was used in proposal.
- disclose prepayment premiums in the
transaction. Are they in excess of unamortized principle
based on the stated interest rate in the proposal.
- can the lease be prepaid for outstanding
principle only, and if so when.
- how fast can the lessor close the transaction
if it is awarded.
- how long will the lessor hold the lease
rate quoted in the proposal.
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