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Kit Menkin’s Leasing News www.leasingnews.org Friday, February 8,2002 Headlines— --Tyco’s Trouble Raises Doubts About CIT
Among CEO’s --- Tyco in Position to Sell CIT in Buyer’s
Marketplace -- Good Time to be In the Leasing Business Equipment
Leasing Association February 4th-5th Forum Tyco International Round-Up--Kozlowski-Welch
Radio Puppet Show GE Capital's new Colonial Pacific/Chicago
office “rumor” Providian Posts Lost, Loan Defaults
Rise The Fed To Watch Bank’s Balance
Sheets More eFund Acquires 2,500 More ATM’s Bill Graneri’s Top Gun
Schedule NY Financial Community to
Hear “Perfect Storm” Association for Government Leasing & Finance Financial Firms Turn
to Web Services Northern Consulting
Global Enterprise Sudhir Amembal
Leaves/Company Now to Be Called ACC ###
denotes press release __________________________________________________________________ Tyco Troubles
Raises CIT IPO Doubts Among CEO's
Tyco
in Position Only to Sell in Buyer’s Market
---Good
Time to Be in the Leasing Business
Participants
at the Equipment Leasing Association Annual CEO Forum, Feb. 4 - 5,
expressed doubt that Tyco can successfully spin off it financial unit,
CIT, through an IPO. Doubts stem from Tyco's decision to take down
$5.9 billion in bank lines to repay commercial paper rather than be
able to access the commercial paper market as is typically done. Tyco
Capital (CIT) then announced that it also would draw down its bank
lines of $8.5 billion. Taking down bank lines is usually a bad signal.
Most CEO's focused on potential buyers for CIT with GE Capital being
at the top of the list. However, it is believed that GE might be reluctant
to make an acquisition that could result in over half of GE's income
coming from GE Capital. In addition, while CIT is a valuable brand
name, the company does carry over $6 billion in good will from previous
acquisitions. The good will could make it difficult to establish
an attractive price that would work for buyer and seller. The ELA CEO Forum is
an invitational meeting for the CEO's of the thirty largest member
companies. The forum includes presentations by investment bankers,
rating agencies and business consultants. Among the key observations
at the 2002 CEO Forum are:
Dominating the discussion on these and other points was the concept of equipment leasing and finance executives as STEWARDS of CAPITAL. The maintenance and growth of capital value is the executive’s responsibility and many executives do not understand that objective. ( courtesy of ELAonline.com ) Tyco
International Round-Up Kozlowski-Welch Radio Puppet Show
A
telecommunications unit of Tyco International Ltd. said Thursday it
has cut 1,000 jobs worldwide as part of a restructuring aimed at reducing
costs and maximizing efficiency amid a downturn in the global market. Other plans are being made to conserve capital
and insure adequate cash flow in other divisions and entities of Tyco
International. Former
employees of CIT were not happy to hear news of their new boss appearing
on radio. On GE/Capital Owned CNBC, and as the guest of Jack Welch, former
General Electric Whiz Kid, Tyco CEO Dennis Kozlowski faced the reality, saying it
was a major mistake of his to purchase CIT
for $10 billion last
year, plus pay
a director a huge finder’s fee for helping to arrange the deal "CIT
was not something I would have done had we known a year ago what we're
doing now," Mr. Kozlowski replied to a question from former GE
chairman “Neutron” Jack Welch, still on a book promoting
tour for “Jack: Straight from
the Gut.” http://www.amazon.com/exec/obidos/ASIN/0446528382/qid=1013130413/sr=2-1/ref=sr_2_1/102-6604306-8652139 Who
is Dennis Kozlowski? Worth.com
named him number 10 out of 50 top business executives last year. Here
is his profile: Business Philosophy The
best way to reduce resistance to workforce and budget cuts in a newly
acquired operation, Kozlowski
believes, is to promote a new boss from among its current staff. "Then
they feel they're part of our team and contributing to a new start." Management Style He
shuns memos, staff meetings, and bureaucracy (corporate headquarters
has 70 staffers for a corporation of 180,000). Personal Strength Still
thinks of himself as an entrepreneur. He spends 60 percent of his
time on the road so he can meet and visit with employees, investors,
and customers. Weakness Whim
shopping and impulsiveness, Kozlowski
confesses, but senior vice-president Bradley McGee disagrees: "Impulsiveness
means regret, and Dennis never looks back with regret." Family Ties Very
close to his two daughters, one of whom is in LBOs and the other,
in Columbia Law School. Passions Flies
small planes and the company helicopter, but given time off, Kozlowski would head for his reconditioned
1934 racing boat, Endeavour, and sail around the world. Corporate Goal Discover
more technological components Tyco can spin off into limited IPOs,
as it did this year with its fiber-optics unit. Personal Goal Have
as much impact on early education as he has on manufacturing. Donates
extensively to schools for underprivileged children and has adopted
a middle-school class with his daughter. Financial Reward Salary
of $1.3 million, bonus of $3.2 million. Mr.
Kozlowski said on air he would not have bought CIT last year, especially in
light of Tyco's plans to split into four companies. He unveiled the restructuring plan last month
as Tyco's stock price plummeted on investor concerns about its accounting
methods. The concerns were sparked by Enron Corp.'s collapse. When
asked about the cash payments of $10 million to Tyco director Frank
Walsh and $10 million to a New Jersey charity in which Walsh is a
trustee, he said it would never happen again. He did not want to make
it appear Tyco was similar to
Enron. Frank
Walsh, who is reportedly leaving the Tyco board of directors, also
was allegedly “instrumental” in brokering the deal. The SEC and investors are
concerned as it certainly questions
Walsh's independence as a director. "At
the end of the day, the board unanimously thought directors have certain
fiduciary responsibilities and we put in bylaws saying that this will
never happen again at Tyco," Kozlowski explaining, moving away
from the debacle at Enron” It wasn't revealed until last month that Walsh was
instrumental in brokering the deal. Walsh also was a CIT shareholder
at the time of the acquisition. Shades of Enron and a “ good ole boy’s” Corporate
America. GE
Capital's new Colonial Pacific/Chicago office “rumor” Leasing
News Was Not Able to Confirm or Deny This Story “One
of our brokers said that GE Capital's new Colonial Pacific/Chicago
office is not funding because all of their employees called in sick.
They told management that
they "weren't going to be treated this way". Have you heard from anyone
with some facts?” (
name with held ) Leasing
News received this and an “anonymous” such message. We attempted to
reach over a dozen “friends” at GE Capital, and another
dozen top people “in
the know. “ If any reader can help us “confirm or deny”,
please let us know
“on” or “off the
record.” editor Providian Posts Loss, Loan Defaults Rise SAN
FRANCISCO (Reuters) - Credit card issuer Providian Financial Corp.
(NYSE:PVN - news) on Thursday swung to a loss
in the fourth quarter loss, including almost $1 billion in charges
and additional reserves as it was hit by rising loan defaults in the
U.S. recession. The
San Francisco-based company, which lends to people with spotty credit
records, posted a loss of $395.3 million, or $1.39 cents a share,
in the fourth quarter, after additions to loss reserves and charges.
That compared with profits of $225.1 million, or 76 cents a share,
in the 2000 quarter. Providian,
which had postponed its results last month, also said banking regulators
have accepted its capital plan. Providian's
customers were harder hurt than most by the recession, which led to
loan losses and slack demand at Providian. The company is cutting
jobs and looking to unload parts of its card portfolio to boost results.
It recently agreed to sell an $8.2 billion card portfolio to J.P.
Morgan Chase & Co. Inc. (NYSE:JPM - news). The
fourth quarter 2001 results include: the addition of $252 million
for loan loss reserves; a $134 million charge for securitization transactions;
a $303 million charge to increase the reserve for the estimated un-collectable
portion of finance charges and fees posted on customer's accounts
in the total managed portfolio; a $164 million charge for a change
in economic and performance expectations affecting the value of its
residual securitization interests; a $133 million charge from estimated
losses from the devaluation of the Argentine peso and reclassification
of the company's Argentine discontinued operations; a $35 million
charge for closing a facility in Henderson, Nevada, and a write-down
of goodwill associated with the company's 1999 purchase of GetSmart.
Providian
also contributed $260 million in cash to increase the regulatory capital
of its subsidiary banks in the quarter. ``They
threw everything into it,'' Matthew Park, an analyst at Thomas Weisel
Partners, said of the quarterly results. ``They put aside a lot of
money to reserves, in the anticipation of further deterioration in
credit quality. But I think it was encouraging regulators approved
this set of charges and their plan to grow.'' Wall
Street expected Providian to earn between a profit of 10 cents a share
and a loss of 51 cents a share, with a mean estimated loss of 6 cents
a share, according to tracking service Thomson Financial/First Call.
The stock closed at $3.46 a share on Thursday on the New York Stock Exchange (news - web sites). Providian stock was the worst performer in the Standard & Poor's 500 index last year, falling 94 percent. ------------------------------------------------------------------------------------------- The Fed To Watch Bank’s Balance Sheets
More Closely By
Jeannine Aversa WASHINGTON
–– The Federal Reserve is keeping close tabs on financial
arrangements that might be used by banks to mask their true financial
positions, a Federal Reserve Board member said Thursday. Former
banker Mark Olson, in his first speech as a member of the Fed board,
said the use of certain financial arrangements to shift risk from
corporate balance sheets is worrisome. "They
can be used to give the appearance that a company has shed risk that
it has, in substance, retained," he said in remarks at a conference
on mergers and acquisitions in Miami. That, he said, "is not
in the spirit of accounting rules." A
copy of Olson's speech was distributed in Washington. Olson
mentioned no companies by name. In recent weeks, Bankrupt energy company
Enron Corp. and PNC Financial Services Corp. have generated controversy
and scrutiny over their accounting practices. Enron
created a host of partnerships to keep ballooning debt off the company's
public balance sheets. PNC Financial Services recently had to revise
its 2001 earnings downward after federal regulators said the bank
needed to change how it accounted for millions of dollars worth of
loans. "Though
there does not appear to be a systematic problem with inaccurate treatment
by bank holding companies of sales of loans to off-balance-sheet special
purpose entities, in certain instances companies have not given appropriate
consideration to this accounting requirement," Olson said. Regulators
will endeavor to ensure that banks provide clear and accurate financial
information to the public that also meets generally accepted accounting
principles, Olson said. "The
Federal Reserve reserves the right to apply its own sound interpretation
of those accounting principles based on a careful consideration of
the underlying facts and circumstances and the economic substance
of the transactions," Olson said. "We
have exercised this right and will continue to do so when necessary
to ensure the transparency of an institution's risk profile and financial
condition through accuracy of its public financial statements,"
he added. –––
On
the Net: Federal
Reserve: http://www.federalreserve.gov --------------------------------------------------------------------------------------------------- eFunds
Acquires 2,500 More ATM’s Scottsdale,
AZ-based eFunds Corp., a provider of electronic payment, risk management
and related IT and business process improvement services, announced
this week its purchase of certain ATM assets from Hanco Systems Inc.
Headquartered
in Atlanta, Hanco Systems manages an ATM network and provides
sales and service for more than 2,500 ATMs in 30 states. A
news release from eFunds states that the company is acquiring all
of Hanco's owned
or leased ATMs and merchant contracts in the United States. With this acquisition,
eFunds will now operate and manage more than 11,000 ATMs in all 50
states and Canada. The news release says eFunds plans to consolidate
the Hanco
Systems ATM network into its Access Cash business over the coming months. __________________________________________________________________ Bill
Graneri’s Top Gun Seminar Series Leasing
Market Strategies www.granieriassociates.com Seminar
Dates and Cites East ( Friday, Feb 8, 2002 – Newark,
NJ ( Friday, Feb 15, 2002 – Ft. Washington, PA ( Mon, Mar 11, 2002 - Boston, MA ( Friday, April 5, 2001 – Baltimore, MD / Wash, DC South ( Mon, Feb 11, 2002 - Birmingham, AL ( Mon, April 22, 2002 – Atlanta, GA ( Mon, May 20, 2002 – Tampa, FL Midwest ( Mon, Feb 25, 2002 - Detroit,
MI ( Mon, May 6, 2002 – Minneapolis, MN ( Mon, May 13, 2002 – Omaha, NE ( Mon, June 10, 2002 – Chicago, IL West ( Mon, Mar 4, 2002 - Seattle, WA ( Mon, Mar 18, 2002 - Phoenix, AZ ( Mon, June 17, 2002 – Los Angles, CA à Topic: Lease Marketing Strategies. à Time: 9:00 - 4:30 PM à Cost: $200.00 for one person or $175.00 per person for
two or more
Registration form for the Streamlined Sales Tax Project and of the Sales Tax Simplification Implementing States to be held on Thursday through Saturday, March 14-16, in Dallas, Texas. If at all possible, you are encouraged to register (and pay if you wish) online at <http://www.taxexchange.org/meet/0302sales.taf Dennis Brown DBROWN@ELAMAIL.COM ###
################################### ######################## NEW YORK INVESTMENT COMMUNITY TO HEAR PERFECT STORMS, LANDMARK STUDY ON EVOLVING EQUIPMENT Lake Tahoe, Nev., --The New York investment community will soon be briefed on Perfect Storms, a new study that examines the rapidly consolidating equipment finance industry, that has been making waves across the country. The Alta Group, widely recognized as the industry’s leader in specialized consulting and advisory services, will present its intriguing account of the evolving industry and demise or exit of prominent equipment finance companies at the Equipment Leasing
Association’s (ELA) Investor Conference slated for March 4-5
at the Essex hotel. Since
the study was released late last year at the ELA’s annual convention,
investment bankers have been meeting with the Alta Group to learn
more about the firm’s systematic process of analyzing leasing
companies, according to John C. Deane, a founding principal and one
of the authors of the study,
published by the ELA’s Equipment Leasing and Finance Foundation.
The industry has enjoyed
incredible growth in recent years, with total global revenues estimated
at $499 billion in 2001 (Source: 2002 Euromoney World Leasing Year
Book). “Over
the past several years, we have seen unprecedented changes in the
equipment finance and leasing industry, some of them predicted and
others quite surprising” Deane said.
“Our ValueCap ™ product drove the development of
this landmark survey and it really breaks down the reasons why some
companies in this exciting, but challenging industry have succeeded
while others have not. We have
found our clients and the investment community are very interested
in our analysis of which companies are positioned for growth, mergers
or sales.” In
fact, Deane said “growth, stability and profit are key words
that come up in almost every conversation Alta consultants are having
with clients and prospects,” referring to the ELA's theme of
this conference. “Executives want to ensure that their strategic
plans for growth or profit are well founded.” Joining
Deane will be Thomas C. Wajnert, a recognized leader in the financial
services industry, current Chairman of the Equipment Leasing and Finance
Foundation, and the former
Chairman and CEO of AT&T Capital. Wajnert is an Alta principal
and founding principal of Fairview Advisors, LLC, a new middle market
merchant bank focused on financing information technology, financial services
and healthcare enterprises. Wajnert
wants investors to know that there are both good and bad operators
in equipment finance and leasing, just as in any other industry, and
“we can help them sort out the best companies and provide them
with alternative ways to invest in this industry.” While
most business executives are aware of the leasing giants, such as
GE Capital and Tyco Capital, Wajnert said they may be interested in
the fact that there are many medium-sized firms with revenues in the
$20 million to $200 million range where there are securitization and
equity financing opportunities. “We
hope that by having our industry association sponsor this event, investors
will be able to distinguish the better players in the market and realize
some alternative ways to invest in the industry,” Wajnert said. “Private
equity firms are interested in the commercial finance and equipment
leasing industry as an attractive alternative to the kinds of investments
they made over last five years,” he added.
“They see that commercial banks have consolidated and
are not serving small to medium-sized customers and that
there is an opportunity to create a new finance and leasing industry and the possibility of creating new leasing
giants.” Perfect
Storms provides key insight into ways to think about firms in commercial
finance and leasing industry. Investors
must assess what the risks may be with each and have a template and
some experience to draw upon to make assessments and to identify where
there are good investments. The
ValueCap ™ process that the Alta Group employs to evaluate companies
uses an analytical structure that
can be applied during a company’s
growth stages, rather than post mortem. About
The Alta Group The
Alta Group (www.thealtagroup.com) is a leading source of corporate
consulting and advisory services, education and training to the global
equipment leasing and finance industry. It is composed of 12 principals
former CEOs, company founders and industry organization leaders who
have more than 200 years of combined experience. Based at Lake Tahoe, Nev., it was founded in 1992 by John Deane, John Giddens, Bill Montgomery and Norm Chapman. ############ ################################################# The
Perfect Storm Nuggets: http://www.leasingnews.org/Conscious-Top%20Stories/nuggets.htm Full
Report: http://www.leasefoundation.org/pdfs/perfectstorm.pdf ______________________________________________________________ You
are permitted to quote us without our permission. We are free. Please
send to a friend as we are trying to build our readership. Association for Governmental Leasing & Finance
The
association went from 250 members in June of last year to 343at the
end of last year. Why? More and more governmental agencies are leasing. As they get cut income and sales tax funds,
cash flow becomes more critical.
School districts, cities, counties, states, and even federal
agencies are turning toward leasing. AGLF
was founded in 1981 to serve municipal leasing industry. Publishes Bi-monthly newsletter; sponsors 2
annual conferences; 50-state leasing survey; federal leasing survey;
and conducts numerous industry projects. Two
types of membership: regular member - private sector organizations
active in leasing/finance; governmental member - any state, territory,
US possession, District of Columbia, or political subdivision of above. Executive
Management. Gary Satterfield, Executive Director. Dues
information: As
many people as would like to from any one company may join. One person
must be designated the Regular Member and pay $650/year dues. The
other members are designated Additional Members and pay $150/year
dues. Non-members
are very welcome at the conference. For registration materials, they
can call or email AGL&F Headquarters 202.742.2453, info@aglf.org
n n
1255 Twenty-third Street, NW Suite 200
------------------------------------------------------------------------------------------------- Financial Firms Turn to Web Services
Seeking
an advantage in a highly competitive industry, banks, brokerages and
mutual fund operators will triple their spending on Web self-service
software over the next three years, according to Meridien
Research. "Although
a large percentage of institutions already have some Internet-based
self service options, very few today offer advanced facilities such
as structured dialog and virtual agents," said Richard Bell,
a senior analyst with the Newton, Mass., firm. "As a result,
investment in Web self-service is a significant differentiator and
potential competitive advantage." The
500 largest financial service firms will boost budgets for direct
deployments of self service applications from $33.9 million in 2001
to $99.8 million in 2004, Meridien estimates.
http://www.meridien-research.com/ Web
self service includes a variety of offerings including frequently
asked questions (FAQs), search engines, databases with natural language
query options, structured dialogue systems and virtual agents. Meridien was founded in 1997 and is privately held. It focuses on three areas: e-financial services, trading and risk management and customer relationship management. Jim Fleming <nationalbusinesscredit@yahoo.com> ---------------------------------------------------------------------------------------------- ###
####################################### ############## Northern
Consulting's New Global Enterprise Focuses on Equipment Leasing &
Finance Systems Integration CHICAGO,
Feb. / -- Northern Consulting announced today that it has formed a
new global enterprise with UK-based Richmond Consulting. The new unit,
Northern Richmond International, will serve the needs of the equipment
leasing and finance industry in the United States and Europe. Cameron
Krueger, managing director of Northern Consulting, said his firm's
focus on systems selection, process improvement and system integration
complements Richmond Consulting's expertise in accounting and workflow
management. "It
became clear to us that our larger clients need our help around the
world, and Richmond Consulting has extensive knowledge of accounting
and systems practices throughout Europe," says Krueger. Richmond's
pan-European clients include auto and equipment leasing enterprises,
banks and insurance firms. The company also partners informally with
multiple lease and accounting software firms, but only those with
products and services that have been tested by Richmond. Richmond
Directors David Pedreno, Richard Berry and Mike McConnell all held
senior level positions in the equipment leasing industry before they
formed Richmond Consulting in 2000.
They are thoroughly versed in the regulatory, legal and operating
environments of all of the main European leasing markets, as well
as the multiple languages throughout the region. Northern
and Richmond both focus almost exclusively on leasing. Each company remains software-agnostic, and
each employs only the most experienced leasing professionals. "We're
actually quite complementary," says Pedreno, pointing out that
Northern brings to the new enterprise strong technology capabilities,
along with experience and expertise in the U.S. leasing market. About
Northern Richmond International
Northern
Richmond International, with headquarters in Chicago and London, is
a management consulting firm which serves the $500-billion global
equipment leasing and finance industry. The consultancy provides operations
and systems strategy designed to increase profit margins, growth and
return on investment. Clients include vendor finance firms, international
banking groups, auto leasing enterprises and expansion-stage independent
commercial finance companies. Northern Richmond International was
established in 2001 by U.S.- based Northern Consulting and UK-based
Richmond Consulting. ############
###################################### ------------------------------------------------------------------------------- Sudhir Amembal Leaves/Company Now to Be Called
ACC ####
################################## Amembal Capital Corporation (ACC) Thursday announced that it will change its name to ACC effective April 1, 2002. Notwithstanding the change in name, ACC will continue to be directed by Loni Lowder, its President and Chief Executive Officer, Kirstin Patterson, Chief Operating Officer, and Larry Grant and Randy Cameron, Executive Vice Presidents. ACC will continue to provide equipment lease financing to middle market customers nationwide. As it and its predecessors have for the past 23 years, ACC will continue to aggressively seek new business. “The name change reflects the final step in Sudhir Amembal’s transition from ACC to the full-time pursuit of his passion – education and consultancy – through Amembal & Associates” said Mr. Lowder. “Sudhir commenced that transition a year-and-a-half ago when he and ACC completed the repurchase of his equity ownership, and continued the process last fall when he resigned as Chairman of the Board effective October 1, 2001. On behalf of the management and employees of ACC, we express our appreciation for his vision and contribution to ACC’s success, and wish him well in his future pursuits” continued Lowder. Amembal & Associates has in recent years focused on emerging lease market training and consultancy. Starting this year, it will refocus on training in the US market where beginning 1978 varied entities (Amembal & Isom, Amembal & Halladay, and Amembal & Deane) founded and directed by Sudhir P. Amembal have trained over 50,000 leasing professionals. For further information regarding ACC please contact Loni Lowder via email loni@amembalcapital.com or telephone (801) 530 7748 or Larry Grant via email larry@amembalcapital.com or telephone (801) 530 7701. For further information
regarding Amembal & Associates, please contact Jaynee Besner via
email at jaynee@amembalandassociates.com
or telephone (801) 530 7799. ###
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Day http://www.superbowl.com/xxxvi/ce/feature/0,3892,4948910,00.html www.leasingnews.org |
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