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Summit Funding Provides $43MM Synthetic Lease for New Frac Equipment

November 06, 2014, 06:00 AM
Filed Under: Energy

Summit Funding Group has funded a four-year $43 million synthetic operating lease for two frac spreads on behalf of a Texas-based hydraulic fracturing company that provides well stimulation services to natural gas and oil companies, according to Eric Freeman, vice president of Summit Funding Group.
After the initial funding was complete, Summit Funding Group recommended a synthetic operating lease for the firm’s equipment needs.
Freeman noted that, in order to fund the lease with no equipment delivery delays, Summit Funding Group made all progress payments as required to a multitude of equipment vendors during the approximately 75 days in which the equipment was constructed and delivered. He added that the finance structure in the $43 million lease delivered two additional benefits to the Texas-based frac company.
“By structuring this as a synthetic operating lease, we were able to both qualify this as off-balance-sheet financing for the firm, enabling the company to manage its bank covenants more efficiently,” Freeman said, “while also allowing our client to retain the tax benefits associated with this equipment.”

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