Inventory financing : buying equity and selling it back

السؤال

Dear Dr. Kahf, Assaalaamu Alaykum Wa Rahmatullah Wa Barakatuh. I hope you and your family are well. I have a question regarding a financial advisory assignment we are working on. We are assisting a manufacturing company to deleverage (they currently have a 90 : 10 debts : equity ratio) by raising equity from a private equity company. They also need capital to expand. The issue is that the private equity company wants a clear exit strategy. For the expansion of capital we are proposing Ijarah and Murabahah so that they can exit. However, for the bank debt refinancing we have a challenge. The cost of funds of the private equity firm is much lower so I want to avoid them just refinancing for a lower interest rate. The private equity firm is proposing taking equity and selling it back to the owners of the company. The question is : A) Can we sell shares in the company today and have pre-determined exit dates and exit prices B) Sell shares in the company today and have pre-determined exit dates but prices to be determined at the future date by an agreed valuation method today (e.g. NBV) As a last resort, the bank debt was taken to acquire the factory and equipment. Can we do a sale and lease-back to the private equity firm to refinance. I suspect this is ‘Inah but please advise if there is any structure we can use to refinance without Riba that will also give the private equity company an exit. I look forward to your response. Also, the manufacturing company took a bank loan of 400m 180m was used to purchase the factory land and buildings 180m was used to purchase machinery The rest was working capital mainly for importing raw materials now they have the opportunity of refinancing the loan as interest rates are over 22 %. The available finance is approximately 750 m 10-20 % of which can be in equity with a clear exit as discussed. This is where I discussed the share sale and repurchase. Where say the shares of the company are sold for 5 per share today then some sold back to the original shareholders for 5.6 in a year’s time, 6.3 in 2yrs time etc... or else at a mutually agreed price at the end of every financial year. If we can find a way to handle the equity, that could solve the bank loan refinancing problem. The rest is to fund the acquisition of additional space (another factory) a new machine and working capital The manufacturing company would like to use some of this money to repay at least 50 % of the bank loan I.e. at least 200m. How can this bank loan refinancing be achieved ? This is where I was suggesting sale and lease back of the initial factory and machinery. If you require further information, please let me know. Thank you. Hajara

جواب الفتوى

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تاريخ النشر

2009-05-20

التخصصات الرئيسية

العلوم المالية و المحاسبية
الأديان
الدراسات الإسلامية

الموضوعات

• الفقه الإسلامي
• البيوع
• التمويل
• إعادة التمويل
• رأس المال
• الأموال
• الشراء
• الأسهم
• شركات الأشخاص
• المخزون

عدد الصفحات

2

نوع البيانات

فتاوى

لغة النص

الإنجليزية

رقم السجل

BIM-734354

• APA
• MLA
• AMA