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Non-Tech : The Children's Beverage Group (TCBG) -- Ignore unavailable to you. Want to Upgrade?

To: mark cox who wrote (1195)	7/29/1998 11:06:00 PM
From: Peter Prickett	Read Replies (1) \| Respond to of 2452

Mark, sounds like the arrangement with Volpak is a lease deal. 1.5mm is a prepayment or "deposit" of some sort. Will have to see when the balance sheet comes out. The one dollar buyout is customary under lease agreements. After all regular lease payments have been made title to the equipment will pass to TCBG for a buck. TCBG can then book the value of the equipment at that time as an asset to the balance sheet. Thus Jon's statement of aquiring an asset worth 4mm to the shareholders at the end of the lease. As far as the 2.5mm of additional profits, I believe that is simply the math result of 7 machines x 30mm units x selling price - cost of sales. An oversimplification but you get the point. As far as smart financing, leasing is generally more expensive than bank financing. However, for existing shareholders, it is better than issuing stock and subsequent dilution. Assuming of course, adequate cash flow exists to service the lease. Will be interesting to see the statements. 1.5mm is a lot up front for a conventional lease. It maybe booked as a capital lease. Or an outright purchase with debt financing from Volpak. Equipment will then be on the balance sheet along with the 3.8mm debt. When paid off, result will be the same, but in the meantime company will be more leveraged. All in all good news. Like you, I remain excited and buy on the downticks. In for the long term. Later, Pete