Lease, Loan or Mezzanine? Different Types of Capital and Their Parameters

by Andrian Dacy

When a shipowner contemplates the best route to capitalize a project, ship purchase, or the entire company, it is faced with deciding from among a range of finance options, each with unique characteristics and potential effects on the business. Each option tends to offer specific parameters that impact the key financing categories:
• cost of capital;
• advance rate;
• tenor;
• security;
• ease of accessing the capital;
• effect on the shipowner’s control of the company.

Over the next two issues, Marine Money will provide an overview of the different types of capital available to shipowners. In this issue, we will focus on bank debt, finance company debt, and leasing. In the next issue, we will examine the costs and benefits of bond issues, private placements and private and public equity.

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