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February
14, 2001
Headlines---- -First Sierra sold to American Express for $5.68 per share in cash. We predicted this last week, naming the company and floor price. American Express active in equipment leasing, likes what it sees, and Sierra Cities is the vehicle, not Advanta or others that it has viewed to purchase. -United Capital Warning--from "Name With Held" -Wells Fargo Equipment Leasing Pres. Jim Renner Views 2001 -Conseco Accused of Falsifying Data -Finatra Moves to Consumer Financing/No More Commercial Financing -Banks Investing Millions in mBanking -Ken Goodman Returns Bob Rodi Gauntlet -GE & FEI Good News --------------------------------------------------------------------------------------------- American Express to buy SierraCities.com for $107.5 mln NEW YORK, Feb 14 (Reuters) - American Express said on Wednesday that it would buy equipment financing company SierraCities.com Inc. (NasdaqNM:BTOB - news) for $107.5 million, in order to expand American Express's small business lending. New York-based American Express said its American Express Travel Related Services Co. unit would pay $5.68 cents per share for about 18.9 million shares outstanding. SierraCities shares rose 3/8 to $4-7/16, or more than 9 percent, from Tuesday close of $4-1/16 on the Nasdaq. The stock has a 52-week trading high of $22-7/16 and low of $1-1/8. SierraCities scrapped its merger agreement with VerticalNet Inc. (NasdaqNM:VERT - news) on Jan. 10., a deal worth $7 per SierraCities share. Shares in American Express fell 48 cents to $46.30 in afternoon trading on the New York Stock Exchange, compared to a 52-week high of $62.8125 and low of $39.833. + + + Market News : Tech Movers
SierraCities.com Jumps 38.3% on Purchase By TSC Staff SierraCities.com (BTOB:Nasdaq - news) was up 38.3% in mid afternoon trading after announcing that it will be purchased by financial services giant American Express (AXP:NYSE - news). American Express said its Travel Related Services unit would pay $107.5 million, or 5.68 per share, for SierraCities, an equipment financing company. American Express said the deal would help expand its small business lending. American Express was down 0.4%. for
history of Sierra Cities go to: http://www.leasingnews.org/articles.doc/newsletter3.htm ---------------------------------------------------------------------------------------------- Name With Held Attention all ex-United brokers: Be aware that United Capital has decided to take an even lower road than previously perceived. If you are having trouble reaching them, it's for good reason - they're hiding from you because they are attacking your database. Not only have they begun to go after the lessees and vendors on transactions that they have funded, but now the onslaught has been waged towards all outstanding approvals. These are the same approvals that you were told could no longer be honored. There is, and has been, a retail arm of United, and they share the same office. Peter Micciche, who has been referred to as the Old Kent reject and the cause of dissention at United, also runs the retail division. Through this sister company, they plan to broker/discount these deals to other funding sources just as you do. From what we have read, United Capital seemed to be ethical, but extremely poor judgement is being displayed in continuing the business in this fashion. As of Feb. 13th, at least two previously outstanding approvals have been closed. The marketing representatives that remain at United after the collapse (the same ones who said they would fight for every one of your deals) are acting as the sales representatives on these transactions. Name withheld ( We spoke with the person who sent this. We have been trying to get information from United Capital for several weeks. They were supposed to come back on line after January 1st, but the specific date was never given, nor do we know the status of this company, and print the above from a reputable person, who requested we did not use their name. editor ). --------------------------------------------------------------------------------------- Finantra Capital, Inc. Negotiates New $25 Million Credit Facility for Consumer Finance Subsidiary
PLANTATION, Fla.--(BUSINESS WIRE)--Feb. 14, 2001-- New York Stock Exchange Listed Bank to Take Lead in Line of Credit to Replace Expiring Finova Capital Corp. Line Finantra Capital, Inc. (Nasdaq:FANT) today said it has signed a Letter of Intent and is negotiating a credit facility for a $25 million syndicated credit facility led by a New York Stock Exchange listed bank. This facility will replace an expiring Finova Capital Corp. line and is expandable upon volume and other financial ratios. The new facility will be used to purchase consumer installment contracts for Finantra's consumer finance subsidiary Travelers Investment Corporation. The facility is subject to final documentation and closing. Due to compliance and other regulatory issues, the name of the bank cannot be disclosed until a final closing takes place. The Company anticipates a formal closing to take place on or about February 28, 2001 "We are delighted to be replacing a one lender facility with a syndicated finance group," said Robert Press, chairman and chief executive officer of Finantra. "Clearly, they recognize what a quality company Travelers is and the outstanding growth potential it offers." Since Finantra acquired Traveler's Investment Corporation a year ago, revenues for the Carlsbad, California-based company are up more than 60 percent. Finantra recently announced a restructuring that will refine the company balance sheet and streamline its business model. The Company said it would eliminate its commercial finance operations in order to focus on its two core finance platforms, consumer finance and services and consumer mortgage lending. About Finantra Finantra Capital, Inc. is a consumer finance company specializing in mortgage lending and servicing, delivered through traditional and online processing systems and consumer finance, billing and collection services offered through its Travelers Investment Corporation subsidiary. . The consumer finance group is involved in mortgage banking and other types of retail specialty financing. The company's leading consumer finance subsidiary, Travelers Investment Corporation, recently completed a $27 million asset securitization with Dain Rausher acting as the company's investment banker. The majority of the bonds received an A2 investment grade rating and were placed institutionally. ------------------------------------------------------------------------------------------ This article was sent to us by Jerry Bishop, Senior Vice-President of First Federal Leasing (jerry@firstbankrichmond.com). It is definitely worth reading. Market 2001: Tough Year or Year of Opportunity? by Jim Renner, President, Wells Fargo Equipment Finance, Inc. The economy is softening, banks are not lending to leasing companies at previous levels, and capital markets are on life support to the industry. Why any optimism? Leasing companies have done well in times of turmoil, and I expect the same opportunities will be available this year, as well. The key will be capital. If you don't have a strong supply of debt and equity today, you cannot take advantage of the opportunity. The Economy---Problems on the Horizon? The long awaited slowdown is here. After nine years of expansion, a slow down is occurring and hopefully it won't turn into a full recession. We will all fell the lessening of demand for capital equipment purchases. The primary driver of our companies is growth, so with less equipment sold, we w ill be fighting over a smaller pie. The important issue will be demanding each specific niche. Not all equipment purchases will rise and fall in the same manner. For example, of the worst industries will be trucking as I expect a recession in this segment. A huge oversupply coupled with a slowing economy and high gas prices will cause a major problem. Financial difficulties of companies will further glut the used truck market. Hopefully other markets will not be as dire but overall less equipment will be sold. Banks-Availability and Credit Concerns. Two issues are exceedingly important today, the tightening of credit standards and fewer banks lending to the leasing industry. First, the banks are tightening credit standards today due to the slowing economy. Problems credits turn into losses that are quickly reflected in the bank's stock price. Obviously, a strong performance is demanded by Wall Street, hence bank management heeds the call. The bank examiners have been getting tougher as they have been saying for a year that banks have been lax in their underwriting. A recent Office of the Currency report said problem loans doubled to $100 billion from $50 billion over the last two years. This will mean a further "flight to quality" and marginal credits will not get approved. When the tightening happened ten years ago, the Fed and OCC didn't' care about structure or collateral, only cash flow. This attitude causes us problems, as deal structure and collateral are usually very important in our transactions. Remember that collateral and residuals also take a hit in a soft economy due to a glut of equipment, lack of demand, and a potential deflation in specific equipment where the 2001 price is less than 200. Second, there are fewer banks lending to leasing companies, especially for working capital or warehouse lines. the primary lender to the leasing industry has been the regional banks. With their continued consolidation, there are fewer banks to lend. One plus one equals one. If one bank has a $15 million capacity for a company and so does the merged bank, the total will be $30 million, but probably $15 million as banks diversity their portfolios. In addition, certain banks have been experiencing credit losses from leasing companies even in this good economy. Hence, "let's get out of this industry." Banks have a "herd" mentality so if an industry is viewed positively, they will follow. And vice versa! For discounting of transactions by banks, there will be fewer players but adequate funds will be available. One-off deals from community banks will be available if the transaction is in their marketplace. Regional banks will lend in this arena but there are few banks today. Securitizations In 2001 this financing vehicle is available only for the largest and strongest. In five short years this vehicle when from an infancy stage product, to huge volume, to a withdrawal and availability. -------------------------------------------------------------------------------------- Ken Goodman Returns Bob Rodi Gauntlet ---- I guess when you are as successful and prosperous as Mr. Rodi it behooves you to (a) become president of UAEL, (b) pontificate about ethical considerations in the charging of fees (and everything else) and (c) totally lose touch with reality. Brokers, lessors and funding sources are all fighting the same battle. The short sighted jerks they deal with don't look beyond the rate in deciding whether to do business with them, so they can no longer compete by providing excellent service because no one cares about that - only about the 25 extra basis points they can squeeze out of the deal. So we compete the same way the banks do. By generating fee income to offset the lower rates. Anyone who has ever bought a house or a car knows that - except perhaps Mr. Rodi. To the intelligent guerilla marketer, opportunities abound - and they will in a regulated environment as well as an unregulated one. You learn the rules and then you learn to use your creativity within their bounds. I hate these holier than thou types. In the meantime, I'm going to put my fee income in my grandson's college fund. Bob Rodi is welcome to try and outsell me any time. Ken Goodman, CLP kendg <kendg@email.msn.com> ----------------------------------------------------------------------------------------------- Did I read it wrong or didn't you have Wingy Manone with a birthday yesterday? jerryw@wizard.com ( You are the only one to report to me about the one arm great jazz trumpet player Wingy Manone. I made an error. His birthday was not the 12th, but the 13th, and thus the reason his date was celebrated twice. editor ) ------------------------------------------------------------------------------------ Lawsuit Claims Former Conseco Officials Falsified Data On Loan Delinquencies
Wednesday, February 14, 2001 In a suit filed last month in federal court in Indianapolis, two pension funds accuse financial-services company Conseco Inc. of falsifying loan records in a bid to lower its loan-delinquency rate and bolster the value of Conseco securities, Wednesday's Wall Street Journal reported. The suit, which is seeking certification as a class action, alleges the primary architect of the plan was Conseco (CNC) co-founder Stephen Hilbert, who was ousted in April along with his chief financial officer, Rollin Dick, in the wake of the earnings woes. Since the departures, the delinquency rate on manufactured-home loans, a large portion of the loan portfolio of Conseco's finance unit, has jumped 50%. Conseco says the jump only reflects a broader trend in the industry. Of the 10 directors and five officers named in the suit, nine remain at the Carmel, Ind., company, including the president of the finance unit, Conseco Finance. The suit claims that executive, Bruce A. Crittenden, and Mr. Hilbert made monthly trips to the division's collection unit in Tempe, Ariz., to oversee the doctoring of accounts. Under their supervision, according to the suit, delinquent accounts suddenly became current, a process, the suit says, Mr. Crittenden called "creative funding." The allegations are based in part on accounts by at least 10 unnamed former employees, from the senior-vice-president level down. The alleged fraud occurred between April 28, 1999, and April 14, 2000. The suit seeks unspecified damages. But in his order appointing the Anchorage Police & Fire Retirement System and the State of Louisiana Firefighters' Retirement System as lead plaintiffs, the federal judge in the case listed the losses of the two pension funds at $1.6 million. Total losses for all the investors in the action presumably would be much higher. The two pension funds brought the suit on behalf of "thousands" of investors who purchased various Conseco securities. Mark Lubbers, a Conseco spokesman, says the company's law firm conducted its own investigation into the allegations and has found them to be "groundless." He said the company plans sometime in early spring to file a motion to dismiss the suit. Through Mr. Lubbers, Mr. Crittenden declined to comment. Mr. Hilbert, through a spokeswoman, also declined to comment. Mr. Dick couldn't be reached for comment. GE Capital Joins Financial Executives International Strategic Partnership Program; Named as Exclusive Commercial Leasing Partner -------------------------------------------------------------------------------------
NEW YORK, Feb. 13 /PRNewswire/ -- Financial Executives International (FEI), the leading professional association for CFOs and other senior financial executives, has announced that GE Capital, the global, diversified financial services subsidiary of General Electric, has joined the FEI Strategic Pa rtners Program as the association's exclusive Commercial Financing Partner. (Logo: http://www.newscom.com/cgi-bin/prnh/20001222/FEILOGO ) "GE Capital is an innovator and market leader in commercial leasing and corporate finance," said Philip Livingston, FEI President and CEO. "Our members will benefit from GE Capital's unmatched expertise in these fields." As a Strategic Partner, GE Capital will be fully represented through FEI's national, multi-tiered Strategic Partners Program that includes conferences, publications, educational seminars, web forums, chapter-level meetings and custom survey and co-branding opportunities. "We are very excited about our partnership with FEI, whose members are leading corporate financial decision-makers -- a critical audience for GE Capital," said James Parke, Chief Financial Officer and Vice Chairman, GE Capital. "This alliance will help us bolster our knowledge base of financial executives' commercial financing needs, allowing us to develop and deliver more customized offerings." Other members of FEI's Strategic Partners Program include American Express Corporate Services, Arthur Andersen LLP, Deloitte & Touche LLP, Ernst & Young LLP, Financial Times, Hyperion, KPMG LLP, PricewaterhouseCoopers LLP, Marsh Inc., The New York Stock Exchange, RHI Management Resources, Royal & Son Alliance, and Solomon, A Great Plains Business Unit. GE Capital (http://www.gecfo.com), with assets of more than US$370 billion, is a global, diversified financial services company that is grouped into five key operating segments. A wholly-owned subsidiary ofGeneral Electric Company, GE Capital, based in Stamford, CT, provides equipment management, mid-market and specialized financing, specialty insurance and a variety of consumer services, such as car leasing, and credit cards, to businesses and individuals around the world. GE is a diversified services, technology and manufacturing company with operations worldwide. Financial Executives International (FEI) is the leading advocate for the views of corporate financial management. Its 15,000 members hold policy-making positions as chief financial officers, treasurers, and controllers. FEI enhances member professional development through peer networking, career planning services, conferences, publications, and special reports and research. Members participate in the activities of 86 chapters, 75 of which are in the United States and 11 in Canada. For more information about FEI, visit http://www.fei.org. SOURCE Financial Executives International CO: Financial Executives International; GE Capital; General Electric ------------------------------------------------------------------------------------------------- Banks invest millions in m-banking
Matthew Broersma Banks will spend £29m on m-banking this year, with growth of 129 percent over the next three years Forget what you might have heard about WAP being dead: banks in Western Europe still see mobile commerce and mobile banking as the future, and are investing millions to make sure they are on the cutting edge. According to a new report from research firm IDC, banks' IT spending on "m-banking" will be $43m (£29m) this year and that is just the beginning. It's all about keeping ahead of the competition, according to IDC. "To avoid further threats from new competitors better positioned in the exploitation of this new channel, many banks have been heavily investing in mobile services since their first deployment," stated Barbara Blesio, program manager for IDC's European Banking service. Most m-banking services are based on WAP, and IDC forecasts there will be 1.8 million m-banking accounts via WAP by the end of the year, mainly in Germany, Scandinavia and the UK. That is despite concerns about whether WAP can handle banking transactions, because of security and other issues. February 14, 1894 Jack Benny Birthday
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