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Date Posted: 10:48:38 06/27/07 Wed
Author: Mayer Etkin
Subject: Use of a Letter of Credit in a Financial Transaction

To position and close a transaction using a letter of guarantee, Letter of Credit or other form of a financial instrument such as an insurance guarantee or a performance bond requires a combination of the right relationships, the expertise and the knowledge as to how to set it up, with whom, on what basis, the capital to cover the costs and the exposure in the deal, plus the pledge of other acceptable asset value and the coordination to bring all the elements together to the closing table.

There is no free lunch. In the legitimate world of capital markets, the deal is not going to get done unless there are either hard assets or cash at risk or other form of acceptable collateral that can be pledged, perfected and surrendered in the event of a default and the failure to cure a default.

For those that want to get technical from a regulatory point of view, in the case of a registered broker dealer take a look at a focus report and note the net capital computation or in the case of the bank a call report.

We deal in the real world and we are seeking real people and real projects.

Generally speaking, you can expect to pay an above market rate of interest, a substantial financing fee and a cost recovery allowance plus an equity kicker. The deal is not for everybody and the project must be able to cover the effective rate of interest and have an exit strategy for the repayment of the funds. The tradeoff is that you gain the flexibility of the repayment schedule on the funds and the value added strategies that can be gained from the use of offshore financing, plus it is non recourse other than to the project with no personal guarantee required.

If after our review of your project we agree to accept your deal, we will agree to the establishment of an offshore escrow and settlement account which will be used to flow funds to your project on a turnkey basis subject to the perfection of the collateral instruments on your project, a first deed of trust for example that will be recorded at closing.

Pre closing costs inclusive of a due diligence review and a Wall Street quality due diligence presentation are in the range of $ 100,000.00 and are reimbursed at closing from the cost recovery allowance. These funds are at risk. They do not go into escrow and they will be spent to set up the deal properly offshore so that the offshore escrow can be in a position to receive the closing proceeds on a pass through basis enabling the transaction to close.

The entire process is turnkey and inclusive of due diligence review and summary presentation to the close of the escrow for the first disbursement generally speaking can be set up to occur within 45 to 60 days and includes the necessary international travel and personal presentation of the wall street quality due diligence presentation.

If you feel your project would be of interest to us, you are invited to call Mayer Etkin at 206-577-2736 or send an email to capsol@comcast.net

A confidentiality agreement is required and this post is subject to the general disclaimer in this forum and is for information purposes only and is not an offering of securities.

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