Equipment manufacturer seeks funding flexibility for its captive
A global Fortune 150 equipment manufacturer sought to change its go-to-market approach and required new funding alternatives for its captive financing arm. The client wanted either partial or full monetization of its captive finance business to free up cash and reduce its debt levels. The client also sought to avoid debt pre-payment fees, reduce disruptions to its existing operations, and minimize accounting implications or tax impacts from unwinding its accrued gross profit tax deferrals.
The Alta Group quickly identified the most optimal alternative financing structure among several options. We assessed the accounting implications of all structural features and advised the client on rating agency reaction, highlighting concerns and potential mitigation strategies. Alta created a comprehensive rating agency presentation that described the desire for funding flexibility with a proactive discussion around risk mitigation. We conducted dress rehearsals with the senior management team prior to their rating agency visits. Rating agency reaction to the proposed financing structure was exactly as Alta predicted and the client proceeded accordingly.