THE FINANCIAL INSTITUTIONS CONSULTING LEASING NEWSLETTER

 

Last Day to Register:  No “At the Door.”

 

Financial Resource Conference

August 28-30, 2001
The Ritz-Carlton, Buckhead
Atlanta, GA

A new Funding Source Exhibit has been added to the FRC.

For Details, visit http://www.lessors.com

 

Or a full story by Leasing News:

  http://www.leasingnews.org/archives/August01/8-07-01.htm

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Capital Stream Announces Cuts in Staff

 

(  CapitalStream.com provides Internet-ready applications to funding sources, brokers, vendors, manufacturers and B2B portals, enabling them to offer flexible financing programs, improve customer service, and increase their competitiveness. Rates, terms, and content can be dynamically managed by finance companies, allowing them to go online with personalized credit programs that respond to the wide range of relationships they have with customers. Using CapitalStream's "virtual private market" solution  to the credit origination process within its Internet sites. )

 

 

I wanted to write and give you a heads-up regarding a staff reduction here

at CapitalStream.  News travels fast and I wanted to make sure you have

accurate information.

 

Like many successful large and small companies, CapitalStream is taking

precautionary measures because we don't see an immediate resolution to the

economic downturn. We still remain financially healthy, and believe that

reducing our capacity is a prudent business decision. Our sales pipeline

continues to grow in spite of the economic uncertainty that virtually

everyone is experiencing in today's market. 

 

This reduction, in no way, will limit CapitalStream's ability to grow and

provide exceptional service to its current and future customers. Our staff

will continue to service our existing customers, build on our technology and

secure new customers. 

 

 

Sincerely,

 

 

John Kruse

VP of Account Development

www.capitalstream.com

e-mail - jfk@capitalstream.com

Direct - 206.548.1603

Fax - 206.545.1273

 

( Thank you.  We need to all look at the news in a more positive manner.

  We need to see the leadership, the strong belief, and businesslike

  approach more often as demonstrated here. This is a solid company.

   Its investors believe in it, and they raised were successful recently

   in raising more capital. The company has re-defined their marketplace.

   We hear  compliments, raves from your customers and former employees

    communicate with you still, as if you are a family.  Thank you for the heads up.                        Also a belated birthday as I understand you turned  40 last Friday. editor )

 

 

 

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Finova Bankruptcy Judge Approves Recovery Plan

By Jeff St.Onge, Bloomberg

 

Finova Group won a judge's approval of a Chapter 11 recovery plan proposed by Warren Buffett's Berkshire Hathaway and Leucadia

 

National, clearing the way for the finance company to emerge from bankruptcy.

The plan is based on a $6 billion loan from Berkadia LLC, a joint venture of Berkshire Hathaway and Leucadia. Scottsdale, Arizona-based Finova will use the loan plus its cash reserves to pay $7.35 billion to creditors.

 

In return for the $6 billion loan, Berkshire and Leucadia will get up to 50 percent of Finova's shares and pick the majority of the company's board of directors. U.S. Bankruptcy Judge Peter J. Walsh in Wilmington approved the Berkadia transaction in June.

"The next big step is getting the transaction with Berkadia closed later this month," said William J. Hallinan, Finova's chief executive. "After that, the reorganization becomes effective."

 

Finova's bankruptcy filing in March was the eighth largest in U.S. history and the largest ever in Delaware, a frequent site for corporate bankruptcies. The company listed $12.4 billion in assets and $11.3 billion in debts in court papers.

"The plan before the court today is the culmination of the work of hundreds of thousands of people over a very short time," Jonathan Landers, a New York attorney representing Finova, told Walsh. "We believe it's unprecedented in bankruptcy history."

 

Under the plan, unsecured creditors will be paid cash for 70 percent of their claims, and Finova will issue eight-year senior notes with a 7.5 percent interest rate to cover the rest.

 

After the recovery plan goes into effect, Berkshire will begin a tender offer for up to $500 million of the new senior notes. Holders of $115 million of trust-originated preferred securities, or "TOPrs," issued by a Finova unit will be paid about 75 percent of their claims.

 

Finova's shares, reinstated under the Berkadia proposal, will represent around 49 percent of the company's outstanding common stock after the plan goes into effect.

An earlier version of the plan provided for 51 percent of Finova's shares to go to Berkadia. The amount was reduced to 50 percent to avoid a change in control of the company, which would have prevented the company from taking advantage of tax credits for losses. Finova reported a $436.4 million loss for the quarter ended June 30 in a recent regulatory filing.

 

"It's a great plan for shareholders," said Andrew Rahl, an attorney representing Finova shareholders. "I'd be surprised if there's ever been a larger recovery" for shareholders in a Chapter 11 case.

 

Walsh also allowed Finova to settle a class-action lawsuit filed in U.S. District Court in Phoenix by company shareholders. Terms of the settlement haven't yet been made public.

 

Berkadia is helping to manage the company's operations under a 10-year agreement reached before Finova filed for Chapter 11 protection. The company said in court papers that it plans an "orderly liquidation" of its loan portfolio and foresees having just $4.27 billion in assets by 2005.

 

Finova isn't taking on any new loan business, Hallinan said.

Berkadia and a venture between General Electric's GE Capital unit and Goldman Sachs Group vied for Finova until June when creditors accepted the Berkadia proposal.

 

Finova began in 1954 as Greyhound Financial, a subsidiary of the intercity passenger bus company. The company was spun off in 1992 and became Finova in 1995.

 

Finova's losses mounted after some clients were unable to repay loans after the U.S. economy slowed. Finova's primary line of business is financing the purchase of used aircraft.

 

Unlike a bank, which uses deposits to fund its lending, Finova is a commercial finance company that depends on selling bonds and borrowing money.

 

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Comdisco Receives Court Approval of Bidding Procedures for Sale of Availability Solutions to Hewlett-Packard

 

 

ROSEMONT, Ill.--(

 

Comdisco Employee Retention, Incentive and Severance Programs

 

and Worldwide Cash Management Programs Approved

 

Comdisco Authorized To Continue Full Scale Services, Leasing and

 

Ventures Ordinary Course Operations Including Payment of Certain

 

Prepetition Claims, Sale and Leasing of Assets, and Management of

 

Loan Portfolios

 

Final Orders Approved On First-Day Motions

 

Comdisco, Inc. (NYSE: CDO) announced yesterday that the U.S. Bankruptcy Court for the Northern District of Illinois approved consensual bidding procedures proposed by the Company related to the proposed sale of Comdisco's Availability Solutions (Technology Services) business to Hewlett-Packard Company. The bidding procedures were supported by the Company's Official Committee of Unsecured Creditors and several prospective bidders that had earlier filed objections to the bidding procedures.

 

Among other matters, the Court accepted Comdisco's proposed bid deadline of September 30, 2001 and auction date of October 11, 2001 for competitive bidding to determine whether a higher or otherwise better offer should be considered, and set October 23, 2001 as the sale hearing date to consider approval of the Hewlett-Packard or alternative transaction. In the event that the Court approves the proposed sale to Hewlett-Packard, the transaction is scheduled to close on November 16, 2001, approximately thirty days later than the original closing deadline. As announced on July 16, 2001, Comdisco has reached a definitive agreement to sell this business to Hewlett-Packard Company for $610 million.

 

Norm Blake, Chairman and Chief Executive Officer, said: "We are pleased that the bankruptcy court and our creditor representatives are continuing to be supportive of our efforts to move Comdisco through the reorganization process in an efficient and effective manner. Just three weeks into our reorganization cases, approval of the bidding procedures for the sale of the Availability Solutions business is an important milestone for the company, as well as our customers, employees and business partners."

 

Simultaneously with entering into the agreement with Hewlett-Packard on July 16, Comdisco, Inc. and 50 domestic U.S. subsidiaries filed voluntary petitions for relief under chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Northern District of Illinois. The filing will allow the company to provide for an orderly sale of its services business, while resolving short-term liquidity issues and enabling the company to reorganize on a sound financial basis to support its ongoing businesses.

 

The Bankruptcy Court also considered and granted all relief requested by Comdisco at yesterday's omnibus hearing on nineteen other separate matters. Among the matters receiving approval were:

 

--  Comdisco's employee retention, incentive and severance

programs for all of its employees (the Company's programs for

certain senior management employees and its emergence program

will be considered at the August 23, 2001 omnibus hearing

 

previously scheduled by the Bankruptcy Court);

 

--  Continuation of Comdisco's full-scale ordinary course business

operations in its Leasing, Services and Ventures business

unit including authority to pay certain prepetition claims,

sell and lease assets, and manage loan portfolios;

 

--  Continuation of Comdisco's worldwide cash management program

and practices including the continuation of intercompany

transactions with non-debtor affiliates and waiver of

bankruptcy investment and deposit requirements;

 

--  Continuation of interim authority to borrow up to $200 million

on the Company's $600 million debtor-in-possession financing

facility (with final approval for the entire facility

scheduled for the August 23, 2001 omnibus hearing);

 

--  Continuation of the wind-down of the Company's former Prism

business unit including the rejection of certain real property

leases and authority to divest assets;

 

--  Establishment of adequate assurance arrangements and

procedures for utilities providing services to Comdisco; and

 

--  Retention of Comdisco's financial and legal advisors for the

Company's chapter 11 reorganization cases.

 

"The combined effect of receiving final approval for continuation of Comdisco's worldwide cash management system and practices together with continuation of our full-scale ordinary course business practices in all of our business units completes a very successful launch of our reorganization cases for our Services, Leasing and Ventures businesses," said Mr. Blake. "We are especially gratified that the extraordinary efforts of our employees has been recognized through the approval of competitive and appropriate retention, incentive and severance programs."

 

Comdisco's operations located outside of the United States were not included in the chapter 11 reorganization cases. All of Comdisco's businesses, including those that filed for chapter 11, are conducting normal operations. Comdisco is continuing to pursue other strategic alternatives to create value for its stakeholders, including evaluating the possible sale of certain of its leasing assets to several interested buyers. The company intends to reorganize its remaining businesses, including Comdisco Ventures, on a "fast-track" basis and has targeted emergence from chapter 11 during early 2002.

 

About Comdisco

 

Comdisco (www.comdisco.com) provides technology services worldwide to help its customers maximize technology functionality, predictability and availability, while freeing them from the complexity of managing their technology. The Rosemont, (IL) company offers a complete suite of information technology services including business continuity, managed web hosting, storage and IT Control and Predictability Solutions(SM). Comdisco offers leasing to key vertical industries, including semiconductor manufacturing and electronic assembly, healthcare, telecommunications, pharmaceutical, biotechnology and manufacturing. Through its Ventures division, Comdisco provides equipment leasing and other financing and services to venture capital backed companies.

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Friday—Odds and Ends

 

 

Play It Safe in “Text Mode”

 

I appreciate the elevation to computer guru, but I hope everyone understands

that my advice was strictly limited to preventing the spread of viruses.

Everyone should set their email program so that the default email format is

PLAIN TEXT. Plain text messages cannot carry vbscripts or viruses, but they

can still transport file attachments that contain viruses! Except for AOL,

most email programs default to HTML format. I still see the majority of

NAELB listserv postings in HTML. Anyone with default HTML settings is a very

high risk for spreading viruses that email themselves to every contact in

their address books.

 

One more thing. In the corporate world, it is proper etiquette to send email

in plain text format. It takes much less time to download and is much more

likely to pass through increasingly strict email filtering programs in use

by large companies.

 

Doug Delack

Alternative Finance, Inc.

DDelack@USA.NET

 

( I also like your idea about a Frequently Asked Question section: We get

    calls for telephone numbers, opinions, where is information on

    Article 9, or you wrote about so and so, where do I go to find

    this, etc.

   One of the most frequent recently is lessors paying a referral fee.

    Several dealers are major publicly traded companies who “force”

    the lessee to use their “own leasing company.”  It is common.  Many

    offer five percent to the vendor company who pay salesmen, if

   they like, part or all.  It is not uncommon for US Bancorp, for one,

   to offer a vendor a five percent referral fee or commission ( we have

   copies of the offer ).  This is done at Dictaphone, among others.  Others

   will not even deal with a leasing company without copies of the lease

   contract, like CDW, or money in advance ( which many vendor related

   lessors have programs for this ). Or the funding source called my

   lessee without my permission, or the funding source called the applicant

   to offer a better rate as they turned down what I offered. There are an entire

   series of FAQ  that we should develop for all readers. editor )

  

~~~

Equipment Leasing Association Sends No Attachments on Their Listserve

 

If anyone posts with an attachment, they get a notice that it did not go

through and why.

 

Wayne Hunt    whunt@elamail.com

ELA Online   http://www.elaonline.com/

 

Jeff -  Is that to be about the Texas chainsaw massacre of the leasing industry?

 

*************************************************

Paul J. Menzel, CLP

Senior Vice President / General Manager

Leasing Division

SANTA BARBARA BANK & TRUST

P.O. Box 1199

Santa Barbara, CA 93102-1199

1 South Los Carneros Road

Goleta, CA 93117

(805)560-1650

PaulM@sbbt.com

 

~~~

 

Regarding Jeff Allard - great guy and a real loss to the leasing

business.,.,.,.but .,.,.,isn't producing "Texas Chain Saw Massacre" really

like producing "Equipment Leasing 2000-2001"????

 

Rick Wilbur

 rick@mediacap.com

 

~~~

 

I think Jeff Allard should combine his leasing industry knowledge with his

movie rights and do a documentary about the blood bath/massacre in the

leasing industry this year. He could show the CEO's of TYCO, GE, and

Citigroup carving up what's left of the leasing industry. They could bury

the survivors alive in the desert around Tempe.  They could then have the

killers chopping up each others market share until the leasing industry is

totally fragmented again. 

 

Bob Rodi

President

LeaseNOW, Inc.

drlease@leasenow.com

www.leasenow.com

1-800-321-LEAS (532

 

 

(If you are not driving a BMW car or motorcycle, what do you drive? editor )

 

Hi Kit:

 

Although I'm sure it's not the most serious question I could answer today, I'm

happy to take a break for a moment...

 

I drive two vehicles (not at the same time, though...:-):

Weekdays: 1997 Ford Explorer Limited

Weekends: 1978 Toyota Landcruiser fj40

 

You can quote me, although I'm not sure why you'd want to!

 

On a separate note, although I am no longer in the day-to-day leasing world, I

scan or read Leasing News each day, depending upon the headlines.  I appreciate