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Charter - Structured Financing

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 third parties.

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 interest.


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