Often, the resolution of financial issues leads to structured financial
products, particularly leases. Leases frequently have periods of
no payment, stepped payments (increasing or decreasing), upgrade,
swap, and early return provisions. These leases, offered globally,
can be short-term or long-term, to weak credits or strong credits.
They can take the form of financing leases where title transfers
upon the last payment, on-balance sheet capital leases, or off-balance
sheet operating leases where TGG takes substantial residual risk
and owns the equipment at the end of the lease. We implement whatever
structure best and least expensively meets customers' requirements
and document the transaction typically on our own paper, in our
name or that of the private label capital corporations we create
in support of our supplier partners.
Our ability to accept the broad range of risks, credits, terms,
financial returns and structures mentioned above is unique, and
greatly facilitates closing sales. In contrast, most lenders have
a narrow window of transactions they can undertake, limited by risk
and return constraints.
To accomplish the above, leases are typically firm, non-cancelable
financial obligations on the part of our customer. As with many
such financial instruments, the lease paper can be discounted or
sold, with a cost of capital based on the customer's own credit.
The Garrett Group has strategic relationships with numerous financial
institutions, banks, insurance companies, financing companies, and
investment banks all over the world. We choose the one (or more)
best able to meet each user's requirements, frequently in the country
where our client is located, avoiding cross-border and withholding
tax issues while preserving tax credits. These loans frequently
have recourse back to The Garrett Group or require equity participation
by TGG (i.e. they are not for the full value of the equipment).
More often they are implemented without recourse or equity participation.
Should a customer have unique borrowing opportunities, for example
availability of government guarantees, low cost bank consortiums,
special tax benefits for ownership, etc., TGG can utilize funding
sources outside its own circle to minimize cost to the user.
In virtually all cases, ownership of the semiconductor manufacturing
tools, at the end of the financing, reverts to either our customer
or to The Garrett Group. Equipment is kept out of the hands of disinterested
Since we borrow most often in our customers' name, our funds are
limited only by their credit. Larger transactions frequently give
us more flexibility than smaller due to the higher level of lender