About this Financing Mechanism Structured asset financing (SAF) rests on banking procedures employed every day in the course of international trade. The business model employed by Compass Atlantic's principal funding associate is a simple reconfiguration of these established trade mechanisms for the purpose of project funding. Central to this "structured asset financing" is the funding provider's established access to third-party assets that function as security for this funding, for which the third-party asset owner is compensated. No asset belonging to the client project is entailed in the transaction. SAF typically takes the form of an equity/debt mix, with the equity portion often in the range of 20% and the debt portion offered on favourable terms. These proportions can vary since each transaction is tailored to the individual project and the asset provider. Project financing provided through Compass Atlantic's funding associate ranges from US$5 million to US$250 million.

Structured Asset Financing: An Illustration Project management unfamiliar with SAF and related financing products may benefit from a theoretical example. A small manufacturer (the Client") with some cash flow and capital wishes to undertake an expansion ("the Project"}. Management has been unable to identify a bank willing to lend the necessary $50 million at a reasonable rate. Raising the new capital via the equity market is impracticably slow and prohibitively costly. In a case where discussions with the SAF group ("the Funder") proceed successfully, the Funder introduces the Client to the law firm ("the Escrow Attorney") that will act as trustee in this transaction. The Escrow Attorney customarily used by the Funder is a member in long and good standing with several USA state bar associations. When all parties are satisfied with the terms and transparency of the financing arrangement, they sign the necessary contractual agreements. A formal transaction then proceeds as follows: 1. The Client deposits $1.6 million into the escrow account of the escrow attorney (designated by the Provider/Issuer) in order to procure a $10 million stand-by letter of credit (SBLC) — a standard instrument of international trade — of which $1.6 million  is held in the escrow account for the benefit of the client.  The Client may retrieve these funds by request at any time. 2. Based on these escrowed funds, the Provider/Issuer instructs its bank to issue a SBLC with a face value of $10 M. This SBLC is backed by assets held by the Provider. (Thus, the name "structured asset financing".)  The SBLC is transmitted by the Provider/Issuing bank to the Funder's receiving bank, where it is verified, authenticated, and accepted into the Funder's bank account. 3. After verification, authentication, and acceptance of the SBLC into the Funder’s account, in a series of simultaneous transactions (comparable to the simultaneous transactions employed in real estate closing transactions), the Client’s deposit is sent to the Provider/Issuer to pay for the SBLC, and the Funder’s bank monetizes the $10 million SBLC in an amount equal to 62% of the face value of the SBLC. From the monetized funds the escrow attorney repays to the Client the Client's $1.6 M deposit. The balance of the monetized funds are used by the Funding associate to fund the Client's project or, at the Client's option, recycled in subsequent repetitions of the process that enable larger SBLC transactions until the Client’s project is fully funded. In this example, the $50M sought would entail three or four repetitions, each requiring approximately one month.

Ventures Qualifying for Structured Asset Financing Sound and fundable projects put forward by companies currently in operation with some cash flow and cash resources sufficient for a SAF deposit are in theory eligible for financing of this type. Under specific circumstances the funding associate may arrange alternative strategies for the SAF deposit in cases where clients have developed a sound and well-supported business plan and can provide proof of funds for an initial deposit proportionate to the full funding sought. Although US$5 million project funding is the minimum required for a SAF transaction, several smaller but otherwise qualifying projects can in some cases be coupled to reach this minimum, with each project contributing proportionately to the initial deposit.

Ventures Benefiting from Structured Asset Financing Those companies most likely to benefit are those that are unwilling or unable to access traditional bank financing or pursue the lengthy and costly underwriting process that forms part of a public offering, or those for whom venture capital and other industry buy-ins erode the founding owners' equity too deeply. Other potential beneficiaries are companies  with an urgent timeline to completion. Compass Atlantic's principal normally completes the due diligence process in a month or less.

Want to Learn More about Structured Asset Financing? Compass Atlantic Inc. is dedicated to linking qualifying projects to appropriate funding solutions that can represent an alternative to mainstream banking and equity markets. You are warmly invited to direct your queries to: