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Tuesday, December 11, 2001 Headlines----
Go GE!---Double-Digit, Immelt predicts Fed to Cut Rate for 11th Time Today Tuesday’s Odds and Ends The History of Colonial Pacific Leasing----- __________________________________________________________________ Go GE—Double-Digit!!! An memo sent to the remaining 300,000 employees
to prime the pump for GE’s analyst meeting next week, promises a double-digit growth and says the Emperor
is wearing clothes. “We will meet our commitments in 2001 in the face of a recession,
the tragic events of 9/11, and many other disruptions in the economy,”
Jeffery Immelt predicts in the memo. “….. double-digit growth
on the horizon for 2002 and beyond.” The latest prediction to the troops is similar
to his forecast in October when GE reported its last quarterly earnings.
Immelt said the company remained confident that it will post double-digit
earnings growth of $1.41 per share this year and double-digit growth
next year as well. Immelt, who took over GE's leadership when
Neutron Jack Welch retired in September, now on a world wide book tour,
said 70 percent of the Fairfield, Conn.-based conglomerate's business
is in favorable markets such as power, medical and financial services. “In our businesses that have been hard
hit by the economy like NBC, plastics, lighting, industrial, appliances,
we are outperforming our competition and will blossom when the recovery
begins,” Immelt said. GE's financial strength will allow the company
to “seize opportunities” in a downturn, Immelt said. He did not mention equipment leasing, or
Colonial Pacific Leasing, to be exact: .Holly Bailey, Betty Ameigh,
Sue Melton, Greg Morris, and some excellent collectors weren’t
mentioned, but perhaps they are moving to Chicago. ___________________________________________________________________________
Tuesday---Odds and Ends Russ Rickards, formerly Bank of the West Leasing/Cenval Leasing Thanks for your interest. Aside from occasionally reading your newsletter, I have not kept up with the happenings of the Leasing industry After 36 years in the "rat race", I was ready for a lifestyle change when I retired in ' 98. I'm not really surprised at your long list of leasing company failures or funding sources that have exited the business. As far as I'm concerned, many of them should not have been in the business to start with. And, as you know, we had similar shakeouts in the decades of the 60's, 70's & 80's. Yet as you say, I am a bit nostalgic about the past. I don't miss the day to day grind, but do miss a lot of the great people that I met during my long career. We sure had some great WAEL conferences back in the 70's. When I think about my old leasing group (Central Bank Leasing, now Bank Of The West) , still funding leases for brokers after almost 30 years, I feel like a proud old father, or maybe it should be grandfather. What do I think about the economy? I don't think the current recession is anyway near as bad as the recession's of ' 74 & ' 81, where we had the double whammy of high interest rates & inflation. Of course, the Sept. 11 tragedy has probably not been fully played out yet. Again, thanks for your interest and keep up the good work.
Your "old " friend Russ Rickards ------------ A word to those who are relatively new to our profession . Leasing tends to run in cycles. Credit is loose, then credit is tight. There a lot of funding sources, then there are few. Etc. Adapt to the changes as change is the only constant in our business. Ted Parker ____ New CEO at United Association of Equipment Leasing Joe Woodley has been like a father too me. Having been his partner for three years and I worked with him for a total of 8 years, I can personally vouch that he hasn't worked a day since 1988. Conflict of interest will not be a problem. In addition, Joe thinks about the big picture. I do not believe that he would make decisions based on his personal situations. I have never known him to do so, or to cross the line of ethics. I understand the concern, and perhaps it is valid, but UAEL needs help and I believe Joe can offer that. Andrew Thorn ____ ------------------------------------------------------------------------------------------------------- Bridge Transport--- Kit thank you for printing our alert message. We have received 10 responses that this company is or has looked for funding. I believe by printing this alert one leasing company pulled funding off the table for Bridge Transport. So we saved one. We are pursuing a fraud case and would welcome any additional information anyone may have on this company and AKL International. Of course I agree with putting an alert section in your news letter. Thanks to all of the leasing companies that responded to M & C and I will let everyone know what happens in our pursuit for justice. John Gallo M & C Leasing Co., Inc. john@mcleasing.com 1-800-416-9080 ______ _____________ Great Christmas Gift---( Yes, this is a plug!!!! But it is also educational. editor ) Looking for a Christmas Present for a Colleague or Someone Who Refers You Business---or your spouse asks you what you want for Christmas----- James Johnson and Barry S. Marks have completed work on a companion book to Power Tools for Successful Leasing . The new book (273 pages) addresses with technology leasing from the lessee's perspective and includes a mock negotiation, as well as legal, tax, accounting and structuring advice. It is a "must" for lessees of computers and other high-tech equipment and a good read for lessors who want to see their business from a different perspective and maintain a competitive edge. The book will be available at, http://www.leasingpress.com/ . For more info, contact Barry or James (at phdleasing@hotmail.com). * * * * * Barry S. Marks * * * * * BERKOWITZ, LEFKOVITS, ISOM & KUSHNER 420 N 20th St., 1600 SouthTrust Tower Birmingham, AL 35203-5202 bsm@blik.com - www.leaselawyer.com 205.250.8333 - fax:322.8007 You might asks them about the original book, Power Tools for Successful Leasing. 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 _ _____________________________________________________________ General Electric Unplugs Colonial Pacific ----The History of this Company by Christopher “ Kit “ Menkin
The
BlissNet Solution----- What
is it you look for in a leasing
partner? Trust? Dependability? Commitment? Sure, there are many characteristics you could name as
We
call it the One Solution. And
that means one leasing
solution that can be customized to fit whatever form you need it to
take, which could entail a unique payment plan or end-of-lease option.
One solution that is built from the ground up, constructed to solve
a certain challenge. Then re-created and reformed to meet the next challenge.
See,
it all comes down to working together to build not only a lease. But
a relationship. And to take that relationship, nurture it and make it
grow for the benefit of all. We're
GE Capital Colonial
Pacific Leasing and we believe that for every leasing problem, there is a solution.
The
one solution that fits all your needs. http://www.gesmallbusiness.com/about_us/about_us.jsp --------- General Electric Also Has a Site for Vendors and Director Users. It is Bliss Direct: http://www.geleasingsolutions.com The small business site will change, when this notice takes effect: “GE Capital is consolidating its Portland, OR based Colonial Pacific Leasing (CPL) business with its other small/mid ticket leasing business, Chicago based Office Technology Financial Services (OTFS). “After careful consideration of our existing product and service offerings against market conditions, we determined that it was important to sharpen our focus on our most strategic business customers. “We therefore regretfully inform you that we are unable to accept new submissions from your business after December 14, 2001.” . Colonial Pacific Leasing Company of Portland, Oregon traces its roots to a captive finance company formed in Massachusetts in 1961. The original name of the company was Colonial Leasing Company of New England. Its specialty was transactions under $2,200; the small ticket marketplace. In the 1960’s, Ford Industries, a subsidiary of Roseburg Lumber Company of Roseburg, Oregon, placed the financing for a number of its “Code-A-Phone” interconnect systems through Colonial Leasing of New England. When Colonial ran onto hard time in 1967, a time of recession, Roseburg Lumber bought the company, thinking it could finance its equipment themselves, and moved it to Portland in 1971 ( the 11 month recession ended November, 1970, ) changing the name to Colonial Pacific Leasing. According to published records, it had a $6 million portfolio, and 10,000 leases, primarily all small ticket items. Roseburg Lumber operated Colonial Pacific on a limited basis. By 1976, the portfolio was $3.5 million, serviced by four employees. Late in 1976, the manager of Colonial Pacific retired and Roseburg Lumber made the decision to become more active in the marketplace. John W. Thorne, president, was hired. He was given the goal to increase the company portfolio to at least $15 million. In 1981, he built it to $50 million in outstandings with 52 employees. Thorne built this portfolio by attracting lease brokers. Instead of having lease salesmen, which was the trend in the 1970’s, Thorne saw having a “commission only “ salesman as the most cost affective manner in attracting business. Instead of going after vendor business direct with your own sales force, he decided it was more cost effective to establish a lease broker network. This was quite different than the times, as the main two leasing associations did not accept members who were not full recourse lessors or managed their own portfolios. In 1979, lasting through 1980 ( the country came out its six month recession in July ) into early 1981, there was a West Coast Brokers Associations, an ad hoc group ( no dues )that numbered up to their top growth of forty members when it disbanded, with original members such as Mont Gates of Leaserite, Salt Lake City, Utah, Jim Harris of Oregon,: George Masters in Reno, Nevada, Jim Swander ( perhaps the first chair of the UAEL broker group) and Duane Russell of San Jose, California, Pat McConnell at Hamilton Leasing, Louis Funston Marin County, California, and Kit Menkin of American Leasing. As stated earlier, no association would accept an independent lease broker, who were all quite independent and scattered all over the country. Thorne had much experience working with larger leasing companies, forming two of them before coming to Colonial Pacific. Before his arrival, it is noted he had been a partner in a multistate firm of lease brokers. He brought with him the idea to build a company through broker transactions, and knowledge of how to do this. In early 1979, Colonial bought Seattle-based World Wide Leasing, Inc. It installed a man as the general manger of that operation who had owned Transworld Leasing in Albuquerque. ( sorry, no record of the person’s name. ) The Albuquerque company was retained as a branch location and World Wide continued. The concept was to form other branch locations, but using independent lease “super brokers,” who were part of the exclusive network. Thorne’s idea was to look a personal credit scores and not collateral. Literature from him to the outside sales force he was created said CPL “... considered all transactions except aircraft and automobiles at the time. Our marketplace was $2,500 to $50,000, requiring the lessee to have at least three years in business, along with good credit.” Thorne actively courted broker transactions, particularly in the smaller amounts. The company was the first note to require financial statements on lease transactions below $15,000 ( it was the policy that financial statements may overcome the “application only” submission). The idea was to create faster approval time, and attract more lease brokers. Colonial Pacific continued its vendor programs, almost all on a recourse basis. CPL ran all credit investigations. Vendors were screened for this program, and according to literature of the time, “ Since it does not require financials of the lessee, it must place a great deal of trust in that vendor. The vendor’s ability to service the equipment and its reputation for doing so are essential ingredients in Colonial’s protection.” Colonial maintained its own sales force, but in the first four years since Thorne took over, more and more business was coming from lease brokers. The change started taking place were Dennis Doyon, Gordon Roberts, and others become more “broker coordinators.” Thorne then had the idea to open territories. According to literature of the day, “ In order to prescreen brokers in cities distant from its headquarters, Colonial will establish one of its brokers in each city as a “broker screen”. Any broker unknown to the company who approaches Colonial from one of those cities will be asked to submit his transaction through the broker screen until such time as the company feels comfortable dealing with him directly.” This was the start of what was later to become the Pegasus program. There were several “super brokers” who built up “fiefdoms,” based primarily from lease brokers who could not qualify due to volume, experience, or perhaps credit, to represent Colonial. The lease broker went through a super broker, who not only “filtered,” but with a volume would increase the commission or percentage shared ( often including the residual of the lease ). “ Colonial also protects its brokers. If a transaction is brought in from a vendor originally introduced to Colonial through a broker, Colonial will protect the broker,” said literature in 1981. Thorne attracted many brokers, as he was the first in the industry to actively pursue this marketplace. Until this time, lease brokers were considered not experienced or reliable, and vendor business through direct leasing salesmen was the key to leasing business. “In its price range, Colonial does very little rate bargaining,” Thorpe said. “ In all other areas, however, it will negotiate. It will doe skips and almost anything else consistent with good credit decisions to make the deal. It prefers to retain Investment Tax Credit since the shelter requirements of Roseburg Lumber are very large, but it is perfectly willing to pass ITC for an increase in rate.” CPL underwent several changes in management again. Roseburg both faced the changing lumber industry, plus a capital program for a growing leasing company. According to a press release of this event, “ Colonial-Pacific Leasing Co. is a wholly-owned subsidiary of RLC Industries Co. of Roseburg, Oregon. The parent company is one of the nation’s major producers of lumber, plywood, paneling, particle-board and wood chips for pulp and paper manufacturing doing business as Roseburg Forest Products Co. The ownership of RLC Industries co. recently decided to concentrate its investments in the wood products bushiness. Thus Colonial-Pacific, its only financial service business, does not fit into RLC Industries Co.’s future plans even though Colonial-Pacific’s financial results and tax benefits have produced an excellent return on RLC Industries Co.’s investment. The sale of the business is contemplated to be structured as a sale of the stock of Colonial Pacific. “ Again, along came a company who thought their product, postage meters, which had catapulted U.S. Leasing, could be of better financial benefit if they also controlled the financing. Bruce Kropschot, on our Leasing News Advisory Board, formed Kropschot Financial Services in 1986. His first client was Colonial Pacific. He arranged the sale to Pitney Bowes Credit Corporation, which was finalized on December 31,1986. According to public records, at their fiscal year-end of March 31, 1986, prior to the completion of the sale, the company had net lease receivables of $92 million. Mike Burns was the president. In February 1987, “ James Merrilees accepted a newly created position of vice president of operations for Colonial Pacific Leasing Corporation, “ reports the Western Association of Equipment Lessors. Merrilees claims never to have sung these words,’ Merrilees we roll along, roll along, roll along. Merrilees we roll along all the live long day’.” The company was the first to use a “wide area network,” before the days of the internet. BLISS was the first available for brokers and lessors. It was a telephone direct “dial-up” to the CPL main frame computer. Rich Viola, Chief Financial Officer, named the program: Broker-Lessor Information System Support. It revolutionized the processing of applications and fundings of transactions. Express Lease was trade marked by Pitney Bowes Credit/Colonial Pacific Leasing. Merrilees enjoyed the support of the parent company. ( After he left, he said in a conversation it was the happiest time of his career and had many good things to say about Pitney Bowes. ) At this time, the volume was $215 million a year. While General Electric was the largest in the industry, there is no doubt at this time Colonial Pacific was the leader in the broker network. Merrilees also set the goal to have a portfolio of 20% “commercial” and 80% “application only.” While 95% of the transactions may have been by credit application, the 5% “financial statement” submission applications brought in 20% each year to the portfolio. Curt Lynse with his staff was responsible for the growth of the commercial division, who’s ability were not advertised, but those that knew financial statement credit, came here.( Lynse was manager of commercial credit, then sales manager, bringing the commercial division to 25% of the portfolio, and in 1998 moved to the small ticket division. He is leaving the end of this month and will reportedly be staying in the Portland area. In this period, the commercial division grew to 33% of the portfolio. ) Merrilees had inherited a vendor program. While other leasing companies had two divisions, such as Lyon Financial and Manifest Financial, Merrilees saw this as a conflict, particularly to attract the “cream” of the broker business. This was the beginning of brokers being accepted into leasing associations, to becoming more educated, some actually building their own leasing porfolio’s, to leasing companies using third parties rather than their own salesmen, and computers were starting to change the way everyone was doing business, including the leasing business. Pegasus was his answer. Colonial chose their six top lease brokers, gave them the vendor accounts, and actually let them operate with the CLP logo. The transition was controversial, and meetings were held in the regions of the new Pegasus dealers to explain the program to all Colonial brokers. While Merrilees did not attend, each Pegasus “dealer” ran the program, I can personally testify that if you made a complaint or had some questions, he heard about it, and would personally call you on the telephone as he wanted this program to work. It did. In 1992, Merrilees was the San Francisco WAEL Conference Chairman, and president of Colonial Pacific Leasing Corporation, Tualatin, Oregon. The credit scoring system, which was started in 1987, was in full swing, with Steve Dunham’s Leasing Associates as one of the top producers. Speed was king. Dunham, among others, was turning the world around in small ticket volume, based primarily on re-brokered transactions. January, 1994 he left. The spring edition of the 1994 WAEL shows Merrilees did “ roll along” and became president and general manager of Nations Financial Business Leasing Group, Beaverton, Oregon. ( aka Greyrock and Nations Credit ). This group was purchased by Textron Financial and became their Vendor Finance Division ( 1999 through July 2001) At the time of his departure, Merrilees told everyone he was leaving because of “this great opportunity.” He was reportedly very happy. Ironically, Mike Cingari had quit Pitney Bowes and gone to work for Nations Credit. It was he who recruited Jim Merrilees. Cingari later was to become president of Colonial Pacific. As Merrilees left, Colonial had an application only produce named “Express Lease” which was approximately 80% of new volume. The remaining business was financial statement business termed the “Commercial Program.” Pegasus was formed to run vendor programs through six of the existing Colonial brokers. This program later was used to do the bulk of the rebrokered transactions. NOTE: the BLISS system was introduced to the brokers as an on-line application process during this time. Everything was in place. A few key people did follow with Merrilees, but the company was humming. Pitney-Bowes hired Mike Cinagri to lead Colonial in 1994. Small ticket scoring, or “application only” transactions grew to $150,000 for returning customers. 1998 United Association of Equipment Leasing Newsline, Summer, Conference Edition, “ Curt Lysne, CLP, a former manager and account executive at CPLC has returned as director of the company’s Commercial Strategic Business Unit ( SBU ). With over 12 years of experience in the leasing industry, Lynse has owned his own brokerage firm and independent contracting business and worked for various funding sources.” October
12, 1998 Press Release --
General Electric Capital Corp. has agreed to buy Pitney Bowes Inc. unit
Colonial Pacific Leasing
Corp. for just over $800 million in cash, according to Charles McBride
at Pitney Bowes. The unit will be added to GECC’s Vendor Financial
Services unit, and will bring approximately 250 employees, and a nationwide
network of 355 brokers and lessors to Vendor. Founded
in 1961 and based in Portland, OR, Colonial
Pacific has assets
of approximately $750 million and finances small-ticket leases on a
variety of commercial equipment, from medical imaging machines to computers.
Its average ticket size is around $30,000. The
company had revenues of about $75 million for the six months ended June
30, following 1997 full-year revenues of $191 million. Year-to-date
leasing volume was roughly $500
million at June 30. For
GE Capital, the acquisitions adds what Fox-Pitt Kelton analyst E. Reilly
Tierney calls "an established player rather than a younger, faster-growing"
competitor. Tierney added that Colonial Pacific
brings with it a solid customer base and a demonstrated track record.
Pitney
Bowes, based in GECC’s home town of Stamford, CT, produces postage
meters, mailing systems, copiers and other equipment, and is in the
midst of a year-long restructuring, of which the sale of Colonial Pacific
is only the latest move. In August 1997, it sold off $300 million in
aircraft and other leases, and contributed another $800 million in leases
to a joint venture it created with GATX Corp. Recent shake-ups in the equity markets may leave companies like GE Capital, which have the comforting support of a gigantic, out-of-sector parent, in a prime position to capitalize on softness elsewhere in the industry. While many members of the usual host of in-sector buyers may be suffering from weakness in stock price, GE Capital, with its deep, all-cash pockets, could be doing some bargain hunting. January 2, 2000 Press Release – Jim Svinth has been named General
Manager/ President of GE Capital Colonial
Pacific Leasing, a leader in the small ticket
equipment leasing
industry. April
6, 2000 , this announcement was made by fax: “Sub-broker business
will no longer be accepted." Discounting commission limits have
been lowered as well as broker commission limits. In
reality, a few were allowed to accept “re-brokered business.”
One of
them was Steve Dunham’s Leasing Associates, one of the first to
use BLISS and the company used first to test programs, including the
Pegasus program, was allowed to submit re-brokered deals.
His story in the leasing business would make
fascinating reading, and perhaps when he retires, he could even write a
book about. Dunham’s
company was not considered a “super broker,” but a proven
marketing arm
for Colonial Pacific. Readers can see from the Leasing News List http://www.leasingnews.org/list.htm at about this time all major leasing companies were having troubles. Discounters couldn’t place the “C” and “D” paper, deals from the previous year were started to jump back up and bite portfolio’s, as collectors were having a tougher and tougher time and the roller coaster was over. It would be by Fall that the list grew even more serious with fallouts, mergers, fraud, foul play, and what was once a fun business, too easy to get into, was fulfilling the Robert Morris Associates analysis of equipment leasing that lenders and certainly the stock market had ignored. February
6, 2001, noon, Colonial Pacific
closed former Tilden operation in Hauppauge, New York and Anaheim, California, It
reportedly came as a surprise to employees, we were told.
They were not "upset," but surprised. They specifically
did not want to talk "on" or "off" the record. We
had reported in Leasing News, September 21,2000: "Tilden in its
current form will be closed down
and folded into GE\Colonial Pacific." http://www.leasingnews.org/archives/September/9-21-00.htm With
the recent consolidation, and from the original news in September, this
was not a surprise to regular readers of Leasing News.
Many brokers were surprised as
being “cut off.” The
official announcement read: CPL announces closure of Tilden Financial Some
of you may be aware that we announced last Fall that GE Capital Tilden
Financial was transitioning to become a part of GE Capital Colonial
Pacific Leasing. After continued assessment and evaluation, we came
to the conclusion that it was best it we consolidated the entire business
into one location. Therefore,
effective today at noon Eastern Time, the offices of Tilden Financial
in both Hauppaugo, New York and Anaheim, California will be closed and
all business activities will be relocated to Colonial Pacific Leasing
in Portland, Oregon. We
made this decision for the following reasons: o We can expand our product offering to
our customers, including the addition of Tilden's expertise in processing
structured transactions. o We are able to leverage synergies between
the two businesses and eliminate any confusion in the marketplace of
having two separate GE businesses focusing on the same origination channel. o We can gain efficiencies by eliminating
redundancies, reducing costs and fully utilizing the capacity at CPL. We
think you'll benefit from having one location to send all your lease
transactions-everything from App-Only to commercial to structured transactions. Our
commitment to servicing your needs is as strong as ever. The people
and resources are in place to make a smooth transition of Tilden's operations
into our offices in Portland. May 18, 2001 Press Release -
Denise Egloria has been named Account Manager for GE Capital Colonial Pacific Leasing,
reporting to Jay McBee, Sales Manager. The above is the last press release on the Colonial Pacific web site. Nothing else from this date is noted. With the acquisition of Mellon and Heller, a large rooftop was created in Chicago, meaning capacity, and GE simply wanted the leasing operation under one rooftop. CPL/GE at the beginning of the month had over 500 brokers, according to a highly reliable source. Some 15% to 20% were chosen to remain, based solely on volume and profitability. There is no appeal process. The rumor about attracting new broker business the first of the year was questioned as to why GE would go through this, and then start again. Basically Leasing News was told this was not true. There is not plan to revamp. There is no plan to repeat the procedures in Portland, Oregon, meaning broker protection from return business, customer or vendor accounts. As
one past president, who does not want to be “quoted” said: |
