Importance In Leaseback Agreement in RX
From my understanding, a leaseback agreement is an agreement in which an individual can sell an asset and then lease it from the buyer. What advantages can this provide in the context of restructuring? Any specific cases?
It's often used to boost liquidity.Ex: you're a retailer and you own your warehouse. You have a big principal pay down coming and you're 5MM short. You can enter into a leaseback transaction to sell the warehouse for 8MM in your pocket today, and lease it back with a finance/capital lease. You can now meet your debt obligations, and you keep operating control of the asset you sold. Since it’s a capital lease, you’re leasing back with the idea you’ll own the asset again
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