Sale-Leaseback Restructuring of Cashflow: Old Assets, New Reality

Dear Chuck,

Yes, agree that our offer to restructure your company's debt is unique -- and flexible. I understand your objections and would guess that you have previously leased new (or nearly new) cars and trucks, and probably not 14 - 15 year old used equipment that is subject to instant devaluation with an engine, transmission or differential failure.

Why would our investors buy 1990's equipment without a guarantee of 1) a much higher rate of return, and 2) a hope of recovering their investment if your public company defaults on payments or goes into bankruptcy?

For arguments sake I've run your scenario past my credit analyst and it raised all kinds of red flags for him: Sale-leaseback of old assets for a money losing public company (with shares trading at 5 cents), in a high risk industry in a failing economy... Short of being on the verge of bankruptcy there is probably no higher risk credit profile.

The only way through this is to provide as much good information as may be available (including appraisals), understanding that our investors are looking for a substantial return and expecting that their perceived risk is at least somewhat mitigated through additional collateral security and/or personal guarantees.

Trust this makes some sense? I always ask my salespeople to think of it as their own money that is being invested. What would you need to feel comfortable with the transaction? What would a smart business decision today look like to you 6 months out?

Hope this bit of context helps.

Regards,

Frank