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| December 29, 2000 Headlines---
Perfect for the New Year: BriteSmile Obtains $15 Million Lease Line Bay View Savings Dividend---Not!!! Cheyenne Leasing Sells "Significant Portion" of Portfolio "Monkey Wards" to Fold as GE Pulls Plug Bradlee Also Closing Retail Stores with "hits" to all lenders Retail Confidence Report Sinks As New Government to Take Office Broker Reaction to Adrian Bulman's Leasing Industry Report ( Bulman receives accolades!!! ) We give you permission, and in fact, encourage you to pass on information to your colleagues. If you would like to join our leasing news network, we are free, with no advertising or banners, too--- all you need to do is e-mail us. View Us on Line, too: www.leasingnews.org Hey! Hey! Go Sierra Cities!!! Despite talk that the merger of VerticalNet and Sierra Cities might not go through, the smart money is on Tom Depping to pull this off. Morale might be down, but that appears everywhere in the leasing industry today---except for the old line companies and the brokers/lessors who experience this cleansing in the leasing industry about every ten years, thereabouts. Depping is a magician and whatever criticism there may be, count on him to be on top and to enjoy his cigars in Costa Rica and laugh at all those who said he could not get it done!!! ---Reaction to Adrian Bulman State of the Leasing Industry Report---- I am a new subscriber (within the last 2 weeks) and I wanted to let you know that I appreciate your time and effort in putting together this newsletter. We are new brokers, about 1.5 years old and have experienced the 2000 downturn in the leasing industry. I have read the article today by Adrian Bulman, and I thought it was insightful and right-on, I have seen basically the same thing with my own eyes. Anyway, Choice Capital LLC is in for the long haul, so we are looking forward to future issues of your informative newsletter. Thanks Again, Jim Ricchini Choice Capital jricchini@choicecapitalllc.com It was a pleasure reading your outlook for the year 2001. Being relatively new in the industry, your comments raise many issues for me. Best of luck in the new year. Steven Kanowitz National Capital Leasing 888-950-9301 ext.116 Nationalcapital@aol.com Kit, back in the early 90's when we birthed NAELB I was astonished at the amount of business brokers generate. However, kind of like how many brokers there really are in the US those numbers are not well known and the lenders certainly are not about to publish them. Example: In 1991 the top ten broker houses in Atlanta were producing, very conservatively, $30,000,000 annually in small ticket leases. If you close your eyes and view the east coast starting with Miami and going north the numbers are staggering. When you apply it to the whole country the numbers are just mind numbing. Having come into the broker market somewhat late in life, I find the distrust between the broker and funding sources amazing. What a strange way to do business. All that volume and yet in those very private conversations away from the crowd many lenders view brokers with quite disdain. What other industry could produce millions and millions for lenders without the lender having any sales reps? My friends in the "real" business world find that amazing. Brokers are being squeezed hard right now. Margins are razor thin. Five years ago we were averaging 7 points per deal and holding $200,0000 in residuals per year. I bet we haven't booked $25,000.00 in residuals in 2000 and our averages are down to about 5%. I think we are typical. 2001 is going to be a very interesting year. name withheld I was referred to your site by a Myrna at Pawnee. Good Stuff! Best Regards, Greg@centerfinancial.com ( Thank you. Here is a Press Release that may interest you: Contact: Gary H. Souverein, Director of Marketing Pawnee Leasing Corporation 800-864-4266, ext. 222 Resignation Pawnee Leasing Corporation announces that Myrna DuPape has resigned from the company effective January 1, 2001. Says Chairman, Robert Day, "We are consolidating the sales efforts in our Ft. Collins office and had offered Myrna a position in Colorado. While we understand her California roots and her reluctance to leave, her positive attitude and friendly manner will be missed by all of us. Myrna has been very effective in promoting Pawnee Leasing Corporation in the California broker/lessor market and would be a valued employee for any company desiring a local marketing representative." Pawnee Leasing dedicates itself to the broker community with highly focused lease programs for start-up and less traditional credits up to $30,000. Pawnee Leasing is a member of the NAELB and UAEL. You can contact Pawnee Leasing Corporation at (800) 864-4266 or by e-mail arrow@pawneeleasing.com. Author! Author! Sales are doing nicely and Jim and I really want the book to improve the level of education out there - one answer to Adrian's well-voiced concerns is that we all need to be a little smarter and understand how leasing works well enough to spot and act upon opportunities. Have a safe and happy New Year! Barry Bsmblik@aol.com ( This is what he is referring to: ) Power Tools for Successful Leasing by James M. Johnson, PH.d Barry S. Marks Leasing Power tools Press 43W690 Willow Creek Court Elburn, Illinois 60119 Phone: 630.365.9004 Fax: 630-365.5602 E-mail: phdleasing@hotmail.com or bsm@blik.com If you didn't give yourself a Christmas or Hannakuh present, now is the time to do so $79.95 plus $5.00 for handling Check, money order or credit card number ( MasterCard/Visa or American Express) with expiration date. Be sure to include name, address and telephone number, with area code or e-mail or fax or call. 310 pages--25 cents a page. My thanks to Bob Rodi for his kind words regarding my "scam story." I agree that the complacency of some funding sources is a major factor in much of the malpractice in our industry. A few years ago, I told the sales rep for one of the biggest small ticket funding sources that they would do well to include a confirmation of the lease-end purchase option terms during their standard lessee telephone audit. I told her that it is difficult to compete against a certain one of her brokers, who sold a one-dollar purchase option deal to the lessee, and then discarded the purchase option letter before funding the transaction as an FMV. I said that in addition to the practice being unconscionable, it also would lead to serious lease-end problems. Her response: "That's OK, we have good lawyers." When she was replaced by another rep, I repeated the conversation to him. He, too, thought it barely worthy of a yawn. Barry Reitman baldguy@keystoneleasing.com Kit, I would like to amplify some of the comments from the individual who contributed the anonymous article regarding Finova and others. More pointedly I would just like to pose the question that I haven't heard anyone ask, as yet, about the dot com debacle; that is "What is going to happen to all of the captive and quasi captive lease portfolios, such as Cisco Systems, Sun Micro, 3Com, etc." There was also extensive leasing to the dot com world done through Dell Financial Services,(now inherited by CIT from its acquisition of Newcourt), Ingram Micro, Merisell, and Tech Data. With the dotcoms crumbling and the CLECs (competitive local exchange carriers) not far behind I'd like to see some commentary from the people who are close to that part of the industry. As an example, GE Capital managed the Sun Micro Systems captive program. It was more of a private label deal. They were providing some incredibly aggressive rates with 36 month terms to companies that didn't have enough cash to make it 6-9 months. This was as recent as late this past summer. I sincerely doubt that these companies are still in business let alone able to service debt on $500-600K leases. These amounts were small compared to some of the other transactions that I had personal experience with. I am guessing that the rate of default in these portfolios will be three to five times higher than normal and that the impact of this will virtually destroy the "venture" leasing business. I have already heard negative reports about Silicon Valley Bank and the bad debt they expect. With the decline of Safeguard Scientific, Internet Capital Group and CMGI this could be expected to be even worse. I have also heard serious speculation that the Sierra Cities deal with Vertical Net is in jeopardy. This is because the completion of the transaction was incumbent upon the stock price of Vertical Net being at certain levels. As I understand it the price of Vertical Net Stock is well below that benchmark at this time. If the deal doesn't tank all together due to this fact, it is evidently going to be held off until a plan "B" can be initiated. Is anybody hearing the same thing I am hearing regarding this? Bob Rodi LeaseNOW, Inc. drlease@leasenow.com www.leasenow.com 1-800-321-LEAS(5327) BriteSmile Obtains $15 Million Lease Line WALNUT CREEK, Calif., Dec. 29 /PRNewswire/ -- BriteSmile, Inc. (Nasdaq: BSML), the leading international provider of a new state-of-the-art teeth-whitening system, today announced that it has secured a lease line of credit of up to $15 million from Excimer Vision Leasing (EVL). EVL leases laser vision correction equipment to ophthalmologists and is an affiliate of LCO Investments Limited, the Company's largest shareholder. In addition to providing working capital to the company, the lease line of credit will enable the Company to place up to 1,655 new BriteSmile teeth whitening devices in Associated Centers in the US, enhancing the Company's ability to meet its strategic objective of establishing approximately 3,700 Associated Centers by year end 2001. The lease line agreement provides that EVL will immediately purchase from the Company 1,345 BriteSmile 3000 teeth-whitening devices in various BriteSmile Associated Centers located in the United States for $5,000,000. EVL will subsequently purchase 1,655 additional devices for up to $10,000,000. EVL will lease all devices to the Company for a term of five years. The Company will pay EVL a monthly rental for each device consisting of a fixed amount (ranging from $25 to $50) plus $25 per teeth whitening procedure. John L. Reed, CEO of BriteSmile, said, "The line of credit facility with EVL allows the Company to continue with our aggressive rollout of Associated Centers in the United States. The Company will be able to finance a substantial portion of the equipment costs of the roll-out without relying on equity dollars." About BriteSmile BriteSmile has developed and manufactures the most advanced teeth-whitening technology available, as well as manages state-of-the-art BriteSmile Professional Teeth Whitening Centers. BriteSmile Centers are currently operating in Beverly Hills, Irvin, Pasadena, Palo Alto, Walnut Creek and La Jolla, CA; Honolulu, HI; Houston, TX; Denver, CO; Boston, MA; Coral Gables, Ft. Lauderdale and Boca Raton, FL; Atlanta, GA; New York, NY; Chicago, IL; Phoenix, AZ. In addition to BriteSmile Centers, the Company has established more than 1,400 Associated Centers. Of the BriteSmile Associated Centers, more than 160 are located outside of the United States, in countries around the world including Argentina, Japan, Singapore, Switzerland, France, Holland, Italy and Belgium. For more information about BriteSmile's procedure, call 1-800-BRITESMILE or visit the Company's Website at http://www.britesmile.com. This release, other than historical information, consists of forward-looking statements that involve risks and uncertainties such as the Company's ability to continue to establish Associated Centers and Professional Teeth Whitening Centers, the ability of those Centers to attract clients, the development and introduction of new products, acceptance of those new products in the marketplace and development of new strategic and marketing relationships in the United States and internationally. Readers are referred to the documents filed by BriteSmile with the Securities and Exchange Commission, specifically the Company's most recent reports on Forms 10-KSB and 10-Q, that identify important risk factors which could cause actual results to differ from those contained in the forward-looking statements. BriteSmile and its affiliates disclaim any intent or obligation to update these forward-looking statements. SOURCE BriteSmile, Inc. CO: BriteSmile, Inc.; Excimer Vision Leasing ST: California IN: HEA HOU SU: FNC 12/29/2000 10:27 EST http://www.prnewswire.com SAN MATEO, Calif., Dec. 28 /PRNewswire/ -- As previously indicated, Bay View Capital Corporation (NYSE: BVC) confirmed today that it is deferring the December 31, 2000 dividend distribution on its 9.76% Capital Securities (NYSE: BVS). The Federal Reserve Bank of San Francisco denied the Company's request for the September 30, 2000 dividend distribution pursuant to the agreement negotiated between the Company and the Federal Reserve Bank during the third quarter of 2000. Pursuant to the terms of the Capital Securities, the Company has deferred distributions until such time as approval can be obtained. The company fully intends to continue to seek such approval; however, it cannot predict when approval may be obtained. During this deferral period, distributions to which holders are entitled will continue to accrue at an annual rate of 9.76% of the liquidation amount of $25 per Capital Security, plus accumulated additional distributions at the same rate, compounded quarterly, on any unpaid distributions (to the extent permitted by law). Bay View Capital Corporation is a diversified financial services holding company with over $5.9 billion in assets. Headquartered in San Mateo, California, it is the parent company of Bay View Bank, N.A. and its subsidiaries, Bay View Acceptance Corporation, Bay View Commercial Finance Group, and Bay View Franchise Mortgage Acceptance Company. Genesee Corporation Announces Sale of Equipment Lease Portfolio To ICON and End of Discussions With Ralcorp to Sell Foods Business ROCHESTER, N.Y., Genesee Corporation (Nasdaq: GENBB) announced late yesterday that the Corporation's equipment leasing subsidiary, Cheyenne Leasing Company, completed the sale of a significant portion of its equipment lease portfolio to ICON Cheyenne, LLC, a joint venture of four limited partnerships managed by ICON Capital Corp. of White Plains, New York. The Corporation received $12.3 million as its portion of the sale proceeds. The purchase price for three of the leases sold to ICON was paid into escrow pending satisfaction by Cheyenne Leasing Company of certain post-closing conditions. The Corporation expects that Cheyenne will satisfy these conditions and receive the escrow funds within sixty days. The Corporation estimates that it will receive approximately $700,000 as its portion of the amount escrow ed. Following the sale to ICON, Cheyenne Leasing Company will continue to own and manage 71 equipment leases in its portfolio that are due to mature during calendar 2001. These leases have an estimated book value to the Corporation of approximately $3.8 million. "The sale to ICON is a significant capstone for the Corporation's venture into equipment leasing," said Mark W. Leunig, the Corporation's Senior Vice President and Chief Administrative Officer. "Since its inception in 1986, Cheyenne Leasing Company entered into more than 460 leases representing total equipment value of more than $200 million," said Mr. Leunig. The Corporation also announced that it has ended discussions with Ralcorp Holdings, Inc. to sell the Corporation's Foods Division. The Corporation had entered into a letter of intent with Ralcorp in August 2000 but was unable to reach agreement on the terms of a definitive agreement. In furtherance of the Corporation's previously announced liquidation plan, the Corporation will continue to evaluate strategic alternatives for the Foods Division. NOTE: Statements made in this news release which are not historical, including statements regarding the timing and amount of the proceeds from the escrow ed portion of the purchase price for the equipment lease portfolio, and the estimated book value of the remaining portion of the lease portfolio, are forward-looking statements. Such forward-looking statements are subject to a number of risks and uncertainties, and there can be no assurance that the expectations or results reflected in those statements will be realized or achieved. Such risks and uncertainties include, without limitation, the failure by Cheyenne Leasing Company to satisfy the conditions necessary to receive the escrow ed amounts and the failure by the Corporation to realize the estimated book value of the remaining portion of the lease portfolio. Copies of Genesee Corporation news releases are available free of charge by calling PRNewswire's Company News On Call at 800-758-5804, Extension 352775, or on the Internet at http;//www.prnewswire.com/cno SOURCE Genesee Corporation CO: Genesee Corporation; ICON Cheyenne, LLC; Ralcorp Holdings Inc. ST: New York IN: FOD Ailing Retailer Montgomery Ward to Close All Stores (( Way behind the times. Their Westgate Store does even sell perfume, as I know and was laughed at later by the women that why would I go there for "Happy?" . editor ) CHICAGO -- Montgomery Ward & Co. filed for Chapter 11 bankruptcy protection from creditors and announced plans to shut down operations after more than 125 years in business and numerous attempts to turn things around. The Chicago-based retailer, which operates 250 stores and 10 distribution centers, is controlled by General Electric Co. (GE). The conglomerate's GE Capital Corp. financing unit gave Montgomery Ward $100 million last summer as part a rescue bid. Montgomery Ward, which posted sales of $3.2 billion in 1999 and employs about 37,000 people in 30 states, started doing business in 1872 as a mail-order company and opened its first retail store in 1926. In August 1999, the company emerged from Chapter 11 bankruptcy protection, which it had sought in July 1997. In a prepared statement, Roger Goddu, chairman and chief executive, said that 'overall weak holiday sales and a very difficult retail environment simply did not permit us to complete the turnaround that might have been possible in an otherwise thriving economy.' The company said 450 workers will be laid off immediately, and that over the next few months it expects to close all of its stores and distribution centers. Further job cuts will be made in the first and second quarters of next year. Dozens of employees were seen leaving the company's headquarters in Chicago with boxes in hand Thursday. Several said they had been told at a meeting that GE Capital was pulling financial support. 'I'm just devastated,' Anece Rich, a 28-year employee who worked in the company's mail room, told the Associated Press. 'They took care of us as best they could.' 'It's sad. It's too bad because a lot of effort has gone into trying to save the thing,' said Sid Doolittle, a Chicago-based retail consultant who spent 28 years as a Ward executive. The company has been financially unstable for years. 'Ward has not established themselves as anything distinctive in the marketplace,' said George Whalin, president of Retail Management Consultants. 'There's just no reason to go there - unless maybe they're the closest store to your house.' Mr. Whalin said it had become increasingly difficult for Ward to survive in a retail market swamped with competitors such as Home Depot Inc. to Best Buy Co. Inc. and Target Corp. Ward's announcement comes two days after discount retailer Bradlees Inc. announced that it is going out of business. 'It's brutal. It's as competitive as anything out there,' Mr. Whalin said. Ward had been shooting for sales growth this year of about 9%. Instead, it hovered at a sluggish 2%. GE Capital said Montgomery Ward's bankruptcy filing won't have a material effect on GE Capital's ability to meet its earnings expectations. GE Capital said it is 'on plan' to meet estimates. Bradlees Is Latest To Cause Credit Problems By Tara Siegel, Dow Jones Newswires Bradlees Stores, which filed for Chapter 11 bankruptcy protection, is the latest financially fragile company to contribute to its creditors' loan collection problems. FleetBoston Financial inherited a $34 million loan to the Braintree, MA, discount retailer when it acquired BankBoston last year; BankBoston was the lead arranger of the original $290 million credit line. Last week, Xerox said it exhausted the last of a $7 billion credit line as it struggles to sell off more assets to raise cash. Several banks hold pieces of that syndicated credit, which is still performing. FleetBoston has certainly seen its share of problem assets, along with the rest of the banking industry. Nonperforming assets during the third quarter rose about 8% from the preceding quarter and analyst Thomas Theurkauf of Keefe Bruyette & Woods said he'd expect the rise to be more pronounced in the fourth quarter. And the increase in bad loans isn't going to stop with FleetBoston. Nonperforming assets, notably those tied to domestic commercial loans, are expected to move only higher next year across the board. Given the California utilities companies recent financial predicament, Wall Streeters are beginning to feel another credit headache coming. Still, FleetBoston has been ahead of the curve in dealing with souring loans, analysts said. "As a consequence of its acquisition of BankBoston, Fleet was able to do a bit of housecleaning, going through the portfolio and jettisoning some questionable credits," said Mark Fitzgibbon of Sandler O'Neill. Bradlees' $34 million credit line may have declined since the loan was first issued in February 1999, analysts said, which they still consider very manageable. Fleet could not be immediately reached for comment. The revolving credit line is scheduled to expire Dec. 23, 2001; Bradlees has already tapped about $174.5 million, excluding letters of credit of about $25.8 million, according to papers filed with the bankruptcy petition. Other lenders in that agreement include CIT Group, Finova Group, Heller Financial, National City, ABN Amro Holding's LaSalle Bank of Chicago, Wells Fargo's Foothill Capital and Foothill Income Trust units, General Electric's General Electric Capital and Congress Financial, according to Bradlees' 10Q filed with the Securities and Exchange Commission on Dec. 12. CIT and Heller Cut By UBS Warburg CIT and Heller were downgraded from "strong buy" to "buy" and "hold", respectively, by analyst Alison Williams at UBS Warburg. Consumer Confidence Sinks to Two-Year Low; Existing Home Sales Rise 4.4% Dow Jones Report WASHINGTON -- Consumer confidence in December dropped to its lowest level in two years, suggesting that consumer spending will continue to slow. Separately, however, housing continued to show resilience last month, given encouragement by lower interest rates. The consumer-confidence index fell for a third straight month, dropping to 128.3 from a revised 132.6 in November, the Conference Board said Thursday. Economists surveyed by Thomson Global Markets had estimated the index would slip to only 132.1. Consumers were particularly pessimistic about the future. The Conference Board's expectations index, which measures the consumer outlook about six months down the line, dropped more than five points to 95.8, its lowest level since October 1998. The board's present-situation index fell to 177 compared with November's 179.7 reading. "This latest decline in consumer confidence suggests that consumer spending will cool further as we enter 2001," Lynn Franco, director of research for the New York business group, said in a prepared statement. "While the overall index continues to signal economic growth, albeit at a slower pace, the continued decline in expectations is somewhat disconcerting. If expectations continue on this downward trend, a more severe slowdown may be on the horizon." The Conference Board index, based on a monthly survey of some 5,000 U.S. households, is considered a key indicator because consumer spending accounts for about two-thirds of the nation's economic activity. The index compares results to its base year, 1985, when it stood at 100. Meanwhile, strong activity in the Northeast gave a big boost to home resales in November. Existing-home sales advanced 4.4% to a 5.22 million annual rate in November, the National Association of Realtors said Thursday. The gain followed October's revised 3.1% decline. Economists had estimated home sales would increase to 5.1 million. "Mortgage interest rates dropped three quarters of a percentage point since peaking in May, which is keeping sales strong in the closing months of the year," said David Lereah, chief economist of the realtors group. "We expect a total of 5.01 million existing-home sales this year, making it the second strongest on record." While much of the economy exhibits signs of substantially softer economic activity, the housing market has remained healthy with robust mortgage applications and sturdy housing starts. In the months ahead, however, economists generally expect home sales to chill. The National Association of Home Builders' monthly gauge of expectations for sales in the next six months fell in December, as did the group's measure of traffic of prospective buyers. The inventory of existing homes for sale has been tight in recent months. In November, the supply of homes for sale fell to 3.6 months' worth from 4.3 months in October. The median price for an existing home was $139,900 in November, up from $138,600 in October. Home resales rose 10% in the Northeast, 8.4% in the Midwest and 6% in the West last month. Sales slipped 0.5% in the South. Separately, the number of Americans filing first-time claims for unemployment benefits fell 23,000 to 333,000 in the week ended Saturday after surging 36,000 in the previous week, the Labor Department said. A Labor Department spokeswoman, however, cautioned that the figures could be subject to a significant revision next week. Because of the holidays, 18 states used estimates to compile the data, so there is the potential for a larger-than-usual revision. In a typical week, no more than two states use estimates. The weekly decline sent the four-week moving average, which smooths out short-term fluctuations in the data, to its lowest point since mid-November, 340,750. With the economy slowing, analysts expect that job growth will continue to moderate and that the nation's unemployment rate, which now stands at 4%, near a three-decade low, will eventually rise.
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