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June 11 , 2001 Headlines--- The Meaning of Whales Swallowing Minnows by Bob Rodi, CLP SDI Capital---Redux Mellon Leasing--Redux Finova Creditors Endorse Berkadia Offer,:Wall Street Journal story Trading of Car Leases/Perhaps Trading of Equipment Leases Next
#### denotes press release --------------------------------------------------------------------------------------------- The Meaning of Whales Swallowing Minnows by Bob Rodi, CLP
Congratulations on LeasingNews now being featured on Lessors.com front page. LeasingNews certainly has arrived!!! Thank you also for putting the picture of Ira Romoff on your on line version of Leasing News last Friday. It fact, we might call it "Black Friday". The only thing that could make this scarier is if it had actually been a Friday the 13th.. When I heard about EAB today I couldn't help but think of a panel discussion, in which I had the pleasure to participate with Ira Romoff at the last joint UAEL/EAEL conference in Las Vegas a couple of years ago. During that discussion Ira accurately predicted the consolidation that we see continuing. He also said that the predatory consolidators like GE, Citigroup, AMEX, Tyco, etc. would get so big that they would collapse under their own weight and "implode." I considered that to be a very visionary statement at that time and I think he is still absolutely right. I wonder if Ira still stands by that concept? I remember Ira talking about it. Just like it would be a normal part of the life cycle of the leasing industry. The other thing that comes to mind is a hot topic of discussion from some ten years ago which was the "Whale-Minnow" syndrome that was predicted by many as the first wave of consolidation began in the early 90's. It was a forgotten concept for a while but I have certainly been thinking about it a lot lately. Down here at the street level I sense that the actual customers aren't reacting favorably to the lumbering giants that are being created in the financial services industry. When all the companies are bought up and all the remaining portfolios are gone, what will be left for the whales to consume? Each other, I guess. At some point there won't be enough food to sustain the growth. That was Ira's point. There will always be a place for men lke Ira, Fred and Omar if they want to stay in this industry. There are a lot of companies who just may want to get big enough to be food for the hungry giants. Is anybody at EAB thinking consulting practice? Bob Rodi drlease@leasenow.com www.leasenow.com 1-800-321-LEAS (5327) x 101 ^^^^^ Regarding EAB it is an unfortunate day for all of the leasing industry to be losing that operation and even more than that people like Ira, Omar, and Rich. These types of guys make our industry a better place. Best of everything for all and thank you for doing it the right way. Todd Kaufman <tkaufman@keystoneefc.com> Mellon Leasing The posts that I saw on Lessors.com were similar to what I see on the Monster.com community. I won't step in on that but when it comes to the tone they were taking there I felt that someone had to say something. You have created a safe place for the employee and by the employee, as well as for the broker and by the broker. There is balance here. There are many wounded nation wide tonight. I heard of one Mellon employee who was promised 120 days notice on Thursday only to receive the axe on Friday. Most of the people I spoke with I can't help. There are too many people in Chicago on the street now. Maybe Heller can absorb some. San Francisco is a hard place to be right now. Some people who had been there for many years were turned away and told they could get their personal belongings later. They wouldn't even let them in for the pictures on the desks. Fred St Laurent Management Recruiters of Melbourne, FL Inc. A division of Management Recruiters International 134th Fifth Ave. Suite 208 Indialantic, FL 32903 321-951-7644 ext 3123 321-951-4235 Fax fred@mrirecruiter.com http://www.mrirecruiter.com SDI Capital The SDI beatings keep on comin' as your coverage for Cobra goes up in smoke. Hope all you SDI employees are in good health without any pre-existing health problems. A discussion with our group health insurance provider, alerts that you may not be covered. The Daniels have not yet made their payments and it doesn't look good. You can get TEMP coverage that should hold you over until your new plan kicks in baring any pre-existing health problems. Give a call to Glenn Hellings at (949) 661-6622 to get more info on your coverage. Name Withheld Leasing News only ran the “Positions Open” once. It was premature as we are developing a “Classified Section” to help out those looking for employment, or a better opportunity. The person who gave us this idea, evidently received a good response: Thanks for the job posting. Had a few good responses already. Best regards, Tim Jewell (800) 619-4532 X-420 tjewell@amerilease.com
Story on Total Funding/SDI Capital " We utilized the broker network to act as our independent sales force to procure vendor relationships, and all business was vendor direct, not re-brokered, but vendor direct, " Collier said in a telephone interview. ". We paid the brokers and vendors a referral fee, depending, a transaction by transaction case." Riddle me this Kit - "When is a sub-broker not a sub-broker? When you pay the a referral fee, of course." As Aerosmith sings "It's the same old song and dance, my friend." ******************************************* John Craine, VP Sales PowerNet Financial Group Inc. Your Professional Equipment Leasing Network http://www.thePowerNet.com (800)348-2288 Fax (781) 461-9449 --------------------------------------------------------------------------------------------- The Leasing News List 105 Company Changes ( the complete list in alphabetical and chronological order is available at: http://www.leasingnews.org/list.htm ) These are the recent changes in Chronological order: Mellon Leasing-Manufacturer and Dealer Services ( 6/2001 ) closes offices, employees let go ( 5/20001) GE Capital makes formal announcement, confirms Jan. report. (1/2001) key employees told company is sold European American Bank ( 6/200 to close brokerage operation end of month, Ira Romoff resigns, Fred Anderson will be on the streets shortly, along with Omar Diaz and Rich Illich) SDI Capital,So.CA ( 6/2001) reportedly gong to file BK, investors to lose $20 M (6/2001) let’s employees go, owing payroll, 401k, medical/health (5/2001) reported has assets up for sale ( 5/2000 closed to broker programs ) PinnLease (6/2001) Leasing News considers it a “not guilty” judgment against Tommy Larsen, but Larsen’s lawyer basically agreed to comply with the temporary restraining order of March 23 and agreed that Mr. Larsen would give an accounting of any possible gains he received that rightfully belong to PinnFund. Since he gave in to everything the receiver wanted, he was not held in contempt. The records shows that being acquitted or not guilty was not what happened. The judge found he wasn't in contempt because, going forward, he agreed to cooperate fully. (6/2001) Judge Hands Down $109 M Default Judgment in PinnFund Scandal. Bounty Hunters Get the Nod to Go Get 'Em ( 4/2001 ) Judge continues freeze of assets. (4/2001) Founder of PinnFund skips bail, judge issues arrest warrant ( 4/2001) PinnFund out of money, closes all offices, including leasing., newspaper stories say “Millions of dollars are gone.” (3/2001) PinnLease USA to Fold 47 Nationwide Offices-- $100 Million Fraud, reads like a tabloid story, perhaps largest fraud in West Coast history. Corona America Financial, So.CA ( 5/2001 ) purchased by TotalFunding.com, although called a merger.. Corona Pres. president, Jack Winsten worked at SDI Capital, as did Total Funding president Alan Collier.. TotalFunding to become soley an “application service provider” and utilize Corona direct sales force. No more broker business, except on “case-by-base” basis, Collier says Medica Capital of California Not the Same as Media Capital Associates There was a recent posting in the Leasing News that I believe requires some clarification. Taycor, LLC (formerly known as Media Capital of California) and Media Capital Associates, LLC are not now and have never been affiliated or associated in an manor whatsoever. There has been quite a bit of confusion with common lenders and more confusion with potential customers. While Taycor apparently operates from "key offices throughout the United States", Media Capital simply plods along in our little shop in Scottsdale. We really are quite different. Thanks, Rick Wilbur Managing Partner Media Capital Associates,LLC (800) 836-7753 ext. 104 Please pass Leasing News to a colleague. Our readership comes from your referral. __________________________________________________________________ Finova Creditors Endorse Berkadia Offer By Matt Murray and Devon Spurgeon, Wall Street Journal The battle for troubled Finova Group appeared all but over as a committee of the company's leading creditors endorsed a revised bailout offer valued at roughly $8.1 billion from Berkadia LLC, a joint venture backed by Warren E. Buffett, over a $7.25 billion plan from GE Capital and Goldman Sachs Group. The creditors' decision dealt a blow to GE Capital, the powerful finance arm of General Electric, which several weeks ago said in a statement that it had won creditors' support for an earlier version of its plan. Their continued backing likely would have given GE Capital an edge in Finova's bankruptcy-court proceedings, since the interests of creditors generally have priority in such cases. The creditors' ultimate decision to support Berkadia also brought to a climax a hard-fought and unusually public brawl between Buffett and GE, headed by his friend John F. Welch Jr. Both are known as financially savvy operators and shrewd negotiators who prefer to stalk their acquisition prey more quietly. The two had engaged in weeks of back-and-forth bidding, with GE Capital avidly wooing creditors and shareholders even though the Berkadia proposal has been backed by Finova management. Finova, a once highflying commercial lender based in Scottsdale, AZ, filed for Chapter 11 bankruptcy protection in March in Wilmington, DE, in one of the largest bankruptcy cases ever. It had $12.4 billion in assets but owed more than $11 billion to banks and bondholders. Even so, Buffett and GE Capital coveted it for its steady fee income, which is especially desirable in economic downturns. According to people familiar with the situation, Berkadia, the joint venture of Buffett's Berkshire Hathaway Inc. and New York-based Leucadia National Corp., definitively won creditors over during meetings late last week by revising the terms of its initial offer for the third time. Buffett didn't use an investment-banking firm for the negotiations and was personally involved in talks with the largest creditors, which at the time of the bankruptcy filing included Citigroup, Wilmington Trust and J.P. Morgan Chase & Co., according to a company filing. The Berkadia offer would pay creditors 70 cents on the dollar upfront, made up of a Berkadia loan to Finova and cash on hand. Finova would issue new senior notes with an interest rate of 7.5%, improved from previous Berkadia offers, for the remainder of the debt. Buffett's Berkshire Hathaway, which already is owed about $1.43 billion in bank and bond debt by Finova, agreed to buy as much as $500 million of those senior notes at 70% face value once they are issued. That would give holders choosing to sell their notes an additional 21 cents on the dollar. Moreover, Berkshire has agreed to hold those notes for four years, demonstrating that it is aligned with the long-term interests of creditors. Holders choosing not to sell could see their value bolstered over time because of Berkshire Hathaway's standing in the market. With the creditors' backing, Finova management expects to present Berkadia's plan at a court hearing. In a statement, the company said it expects that the plan, which still must be approved by shareholders, will quickly be confirmed in court. GE Capital could press a court challenge seeking the right to have its own proposal disseminated to all creditors and shareholders along with Berkadia's plan, but people involved in the talks said such a challenge seemed unlikely without major parties supporting it. "The creditors have made their decision, despite what we regard as a very competitive offer," said John Oliver, a GE Capital spokesman. Berkadia, for its part, declined to comment. Meanwhile, shareholders of Finova, who constitute their own interest group in the bankruptcy proceedings, hope to reach their own agreement with Berkadia early this week on several of their concerns, including management of the company going forward and representation on the board of the restructured company. "Those are points we feel very strongly about," said Andrew Rahl, a lawyer at law firm Anderson Kill & Olick who is representing a committee of shareholders. "I think we'll be surprised if we meet a lot of resistance from Berkadia." He also noted, "I have every expectation that the equity holders will be very comfortable with the economic terms of the Berkadia deal." Among the largest shareholders of Finova are Legg Mason Inc., which has a stake close to 10%; Greenlight Capital PLC; and Dimensional Fund Advisors Inc. Berkadia first reached agreement on a bailout plan with Finova in February, not long after Finova had rebuffed an overture from GE Capital and Goldman and shortly before it filed for bankruptcy. The company had been hit by a liquidity problem last year after it announced a surprise $70 million loan write-down, which was exacerbated by the economic slowdown. Some creditors and shareholders grumbled about the initial Berkadia offer, saying it was too favorable to Berkadia at their expense. GE Capital saw an opening, but alienated some creditors and shareholders with its own offer because of its fees and because the offer was contingent on due diligence Trading of Car Leases---Perhaps something also for the Equipment Leasing Industry #### ############ #################### LeaseTrader Announces the Launch of LeaseTrader.com En Espanol
HALLANDALE, Fla--LeaseTrader.com, the automobile leasing marketplace today announced the launch of LeaseTrader.com en Espanol. LeaseTrader's patent pending solution addresses the needs of consumers looking to get out of their current auto lease, take-over a short-term lease, or lease their next new vehicle. LeaseTrader.com is the first online automotive service site to serve the 35 million U.S. Spanish speaking community. With a current purchasing power of over USD $400 billion, the U.S. Census estimates by 2002, Hispanics will replace African Americans as the largest minority group. By 2025, the projected size of the U.S. Hispanic population will grow to 61 million, two times the size of today's market. "A key element in our success is our focus on creating and executing a greater consumer experience. By offering our solution in Spanish and English we are adding a comfort level to many of our current and future Spanish-only and Spanish-Preferred leasing clients," explained Ariel Stiberman, the Company's President & Chief Operating Officer. LeaseTrader's patent pending process offers consumers trapped in their auto leases a cost effective and secure way to transfer their lease to individuals seeking short-term lease opportunities. Individuals and Corporations looking to get out of their lease(s), post their lease and vehicle information online at LeaseTrader.com (http://www.LeaseTrader.com) and are connected with consumers looking to take-over those leases. The Company then provides tools and services to facilitate and enhance the leasing experience. Automobile leasing reached $83 billion in the United States in 1999. Leasing accounts for one out of every three vehicles sold in the US. In some luxury brands, the number rises to seven out of very ten vehicles sold. LeaseTrader.com, along with its partners, is positioned to become the leader in this explosive new sector of the automotive industry. The Company has filed a patent application with the United States Patent and Trademark Office. CONTACT: LeaseTrader.com, Hallandale Ariel Stiberman, 954/343-4488 Fax: 954/343-4489 astiberman@leasetrader.com #####################################################
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