"These letters of credit are required because of e.Digital's inability to establish credit with the manufacturers, who I'm sure don't want to have to keep accepting stock as payment. Without the L/C, e.Digital would have to pay upfront. This way F-T is substituting its good credit for e.Digital's bad credit"
"These letters of credit are required because of e.Digital's inability to establish credit with the manufacturers, who I'm sure don't want to have to keep accepting stock as payment. Without the L/C, e.Digital would have to pay upfront. This way F-T is substituting its good credit for e.Digital's bad credit."
but it`s obvious you don`t understand the "How" part.
As a former banker, Cassandra, I`m not the one confused. Companies like F-T could very well have what`s called a "revolving credit facility" at their bank with outstanding letters of credit and loans not to exceed an established limit. As in our case, when e.Digital draws down the L/C and receives payment by the issuing bank, that amount immediately converts to a loan obligation under FT`s RCF period
Perhaps you should have conferred with your No. 1 disciple on this matter ... here is proof-positive, if you don`t want to believe me:
*****************
All letters of credit contain these elements:
- a payment undertaking given by the bank (issuing bank)
- on behalf of the buyer (applicant) [ECLIPSE by F-T]
- to pay a seller (beneficiary) [e.Digital]
- a given amount of money
...
Put simply, the issuing bank's role is twofold:
- to guarantee to the seller that if compliant documents are presented, the bank will pay the seller the amount due.
RP - "Most of the NRE and development fees are being paid to us outside of the Letter of Credit. Most of the Letter of Credit is scheduled to be drawn down upon delivery of the units."
Now that you understand just what a sweet deal this is for e.Digital, what do you think about little ole APS ? By the way, it really is more than just a one-man company, but that`s according to RP, so you can believe it or not. At any rate, APS does appear to be getting their part of the job done.
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