Financing Challenge:

A privately held fuel distributor became a victim of spiraling fuel prices. As the cost of fuel increased more than 200% since January 2004, The Company's fuel purchases doubled as well. As a result, the customer receivables and inventory The Company financed also doubled in value. The "tax oriented" company was unable to obtain the appropriate amount of traditional financing from a commercial bank. Instead, The Company used "Vendor Financing" to fund its business. It purchased the majority of its fuel from a supplier that added $.03 to the cost of each gallon of fuel that The Company purchased. Approximately 13 million gallons of fuel per year were purchased using this expensive method.

Creative Financing Solution:
Asset Enhancement Solutions, LLC ("AES") arranged financing with a non-traditional lender that was able to completely eliminate the need for Vendor Financing. As a result, The Company expects to save approximately $120,000 per year in financing costs. In addition, The Company is less dependent on this one supplier and now has the freedom to negotiate with other suppliers for lower prices. As fuel prices are highly volatile, the new lender is prepared to either increase or decrease the Line of Credit as appropriate. The interest rate on this Revolving Line of Credit was Prime plus 1%.

Contact
Neil Seiden, 516-767-0100
neil.seiden@assetenhancement.com

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