Letter of Credit.6 Apr 2020 10:48
Good morning all.
From the RNS dated 6th January, 2020:-
" Preserving and managing CyanConnode's cash remains a key focus as the Company moves towards break-even, with a number of short to medium term funding options being considered to help strengthen this position. For example, a Letter of Credit ( LoC ) is being provided by Genus for this project, which will mitigate CyanConnode's financial exposure relating to the manufacture of up to 200,000 communications modules. The LoC will also facilitate advanced payment for those modules, as and when they are delivered to Genus."
From the information provided by MayNotMatter:-
" A letter of credit, or " credit letter " from a bank guaranteeing that a buyer's payment to the seller will be received on time and for the correct amount. In the event that the buyer is unable to make a payment, the bank will be required to cover the full or remaining amount of the purchase. It may also be offered as a facility."
" Due to the nature of international dealings, including factors of distance, differing laws in each country and difficulty in knowing each party personally, the use of letters of credit has become a very important aspect of international trade."
So if, as we have understood it over the last year or so, a range of modules have already been manufactured and probably already paid for by CyanConnode.
So as the Letter of Credit, is designed to " ...... mitigate CyanConnode 's financial exposure ..... " the " receiver," namely Genus, could pay for the RF smart mesh and cellular solutions, when they are delivered, without the " payment from date of invoice " delay period - 30/45/60 days - being implemented.
Just a thought.
LTI.
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