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Way to Go! Lakers!!! Three ‘Peat!
Kit Menkin’s Leasing News
www.leasingnews.org Thursday, June 13,
2002 Accurate,
fair and unbiased news for the equipment Leasing Industry -------------------------------------------------------------------------------------
Headlines---- One More Worry for Wall St.: A Potential Plunge in the Dollar Good News----Tyco Cleared to Sell Unit to the Public Bad News----SEC to investigate Tyco Eastern Association of Equipment Lessors Crabfeast by Steve Geller, Leasing News Advisory Director Equipment Leasing Foundation Request Sean Wheeler---Deep Blue Sea Marine Reader’s React to Leasing News Saluting Chuck Brazier Needs Leasing Company--- Barry Bourdage USXP to Acquire Go Automotive Leasing Fitch Presale Report: Marlin Leasing CRS Financial Merges with Tasco LFC Capital Acquires MFP Medical's Equipment Refurbishing Business New Netscape shows promise--- Ms. Computer ### Denotes Press Release
------------------------------------------------------------------------ One More Worry for Wall St.: A Potential Plunge in the Dollar (and you were looking for a fun summer? editor ) By JONATHAN FUERBRINGER New York Times So what else could go wrong? That is the question on many investors' minds as they assess what is keeping the stock market in the doldrums, despite positive outlooks for the economy, inflation and corporate earnings. What appears to be holding the market back are more intangible concerns, including fears of another terrorist attack, distrust of corporate executives and worries about the accountants who have been reviewing their books. Now add to that list of fears a potential plunge in the value of the dollar. Since its high for the year at the end of January, the dollar has fallen 9.4 percent against the euro. The dollar is down 7 percent against the Japanese yen since its 2002 high in early February. So far, the decline has been orderly. But Stephen S. Roach, chief economist at Morgan Stanley, says the chance of a dollar plunge has grown recently — to a 15 percent probability from 5 percent. While the odds are low, the impact should be considered. The dollar, by Morgan Stanley's calculation, is overvalued by 14 percent. It is also threatened by the United States' large current account deficit, including international trade. Covering this deficit requires a rising inflow of foreign capital. This means a slowdown in foreign capital inflow would weaken the dollar. The return of federal budget deficits in the United States and hints of protectionism, especially tariffs on foreign steel imports, "hardly instill confidence in the dollar as the mainstay of global commerce," Mr. Roach wrote in his recent report. Mr. Roach defines a plunge in the dollar as a decline of 20 percent or more in its value against the euro and the Japanese yen by the end of this year. Based on a starting date of May 24, that would put the dollar/euro rate at $1.15 and the dollar/yen rate at 100 yen to the dollar. In late trading Tuesday, the euro was worth 94.82 cents and there were 125.32 yen to the dollar. In theory, an orderly fall of the dollar should provide offsetting pluses and minuses for the United States, Europe and Japan, minimizing the negative impact globally. The stronger euro and yen would make imports from Europe and Japan more expensive, while American goods would be less expensive for foreigners. With imports to the United States costing more, inflationary pressure here would be greater. But that pressure would ease in Europe and Japan as the cost of imported goods, including oil, declined. "Export growth would be restrained in Europe and Japan, while foreign demand for U.S.-made goods would be stimulated," Mr. Roach wrote. "Inflation would be a little higher in the United States, but lower in Euroland and Japan." But a rapid decline in the dollar would be negative, in part because it would erode confidence in the United States. The biggest impact, Mr. Roach said, would be on financial markets, with declines in stock and bond prices and higher interest rates here. The fall in the stocks and bonds on Wall Street would be fueled by foreign investors pulling out of the American financial markets and American investors looking abroad to take advantage of a weaker dollar. The dollar could also be pushed lower if central banks around the world, which hold 76 percent of their official currency reserves in dollar-denominated assets, decided to diversify into the euro and the yen. All this could lead to a "devastating blow to consumer confidence" in the United States, cutting into the spending that helped cushion the decline in last year's recession and has helped the economy rebound this year. Such a blow to consumer confidence, Mr. Roach said, would "stoke renewed fears of a double-dip" recession. The impact of a dollar plunge would also be negative in Europe and Japan, possibly knocking as much as one percentage point off growth in Euroland and half a percentage point off growth in Japan. Stocks would also suffer. "If the world's growth engine gets hit by a currency-related wealth shock, the global reverberations would come at a fast and furious pace," Mr. Roach said. _______________________________________________________________________ Good News----Tyco Cleared to Sell Unit to the Public By ALEX BERENSON New York Times. Tyco International received approval yesterday from the Securities and Exchange Commission to sell its financing unit, the CIT Group, to investors in an initial public offering that the company hopes will raise more than $5 billion. Separately, Tyco said the S.E.C. had opened a formal investigation into whether its executives, including L. Dennis Kozlowski, its former chairman, misused company money and whether it properly disclosed payments and loans to executives. Tyco said it would cooperate with the investigation and was unaware of a wider inquiry by the commission into its accounting. Short sellers, who profit when stocks fall, and some analysts contend that Tyco uses deceptive accounting to inflate its reported growth and profits. A spokeswoman for the S.E.C. declined to comment. As a matter of policy, the commission does not discuss continuing investigations. Despite the S.E.C. investigation, investors were cheered that Tyco received a go-ahead to sell CIT, which it bought only last year. Rumors that the offering would be held up by the commission's concerns about Tyco's accounting had battered Tyco's stock, pushing it down as much as 25 percent yesterday afternoon, before the announcement was made. If it is successful, the offering will free CIT from the questions that surround its parent — and significantly ease the risk of a near-term cash squeeze for Tyco. Tyco's investment banks must now pitch CIT to investors when the market for new offerings is generally weak and financial services companies like CIT are out of favor. Tyco hopes to raise $5 billion to $5.8 billion from the sale, which would make it the third-largest offering in United States history. The company hopes to complete the deal by early July. Tyco also said it would take a noncash loss of about $6 billion as part of the offering. It will take most of the loss by restating its earnings for the quarter ended March 31 down by $4.5 billion, and the remainder after the deal is finished. The loss represents the difference between the value of CIT on Tyco's books and the amount that outside investors are willing to pay for it. Tyco values CIT at $11.3 billion, so if the company sells CIT for $5 billion, for example, it will have a loss of $6.3 billion. The write-off was widely expected, and Tyco shares rallied sharply on the CIT announcement, which was made after the close of regular trading yesterday. After hours, shares of Tyco rose $2.80, or 28 percent, to $12.95. It closed at $10.15, down 90 cents, during the regular session after falling as low as $8.25 on rumors that the offering would be delayed. But the success of an offering, especially at the price Tyco hopes to obtain, is far from certain, said Nick Heymann, an analyst at Prudential Securities who rates Tyco as a hold. Mutual fund managers who specialize in investing in financial services companies like CIT have shown only tepid interest in the deal, he said. The S.E.C.'s approval is "a step in the right direction for them," Mr. Heymann said. "They now have to fill the book" of potential buyers. In a sign that even a successful CIT sale may not dispel the longer-term problems Tyco faces, Moody's Investors Service, the bond-rating agency, lowered its rating on Tyco's bonds to below investment grade yesterday. Tyco faces management turmoil and a potential cash squeeze next year, even taking into account the CIT offering, Moody's said in its report. Last week, Mr. Kozlowski resigned and was charged by Manhattan prosecutors with evading more than $1 million in sales tax. On Monday, Tyco fired Mark A. Belnick, its general counsel, saying he used company money to buy or refurbish a vacation home in Utah. Mr. Kozlowski has pleaded not guilty; a lawyer for Mr. Belnick has denied the company's accusations. Tyco, a Bermuda-based conglomerate with 250,000 employees, bought CIT last year for $9.2 billion in cash and stock to add a financial services division to its manufacturing, health care and security systems businesses. The purchase raised eyebrows on Wall Street at the time because Tyco had no experience in CIT's core business of lending to small and midsize business. Tyco stock fell 8 percent the day it announced the acquisition. But buying CIT moved Mr. Kozlowski one step closer to his dream of making Tyco into another General Electric. G.E. has a large and very profitable financing unit. Unfortunately for Tyco, when the company's accounting practices came under scrutiny earlier this year, both Tyco and CIT lost access to the short-term commercial paper market, the cheapest source of financing for big companies. Lending companies like CIT depend heavily on cheap financing for the loans they make. So being shut out of the commercial paper market left CIT at a crucial competitive disadvantage, making it imperative that CIT escape Tyco's problems by being spun off or sold. But Tyco could not find a buyer for CIT, despite repeatedly lowering its asking price, which was initially $8 billion to $10 billion. In April, the company said it would move ahead with an offering to raise $6.5 billion. Now that price has been cut again. Bad News----SEC to investigate Tyco By Harry R. Weber, Associated Press CONCORD, N.H. (AP) The Securities and Exchange Commission plans to open a formal investigation of embattled Tyco International Ltd. involving the criminal charges against its former chief executive, the company said Wednesday. Tyco said in a statement that it would cooperate with the investigation of former chief Dennis Kozlowski ''and any other issues that arise from that.'' Late Wednesday, Tyco did get some good news when the SEC approved the registration of Tyco's lending unit, CIT, for an initial public offering. The approval clears a major hurdle for Tyco, though it is still unclear when the deal will be completed, said a source with knowledge of the matter. Tyco said it expected the IPO to reap as much as $5.8 billion, down from the $7.2 billion the company had earlier said it hoped to get. Tyco paid more than $9 billion for CIT last June. The company plans to use the proceeds to pay down about $27 billion in debt. Tyco had hoped to complete the deal by the end of June, but said recently that could be delayed a week. The news about the SEC investigation and the CIT clearance came two hours after the stock market closed Wednesday. Before the close, investors dumped Tyco shares on speculation that the embattled conglomerate may have trouble-unloading CIT. Tyco shares were down more than 22 percent at one point Wednesday afternoon, before they recovered somewhat, closing down 8.1 percent, or 90 cents, to $10.15 a share, on the New York Stock Exchange. In after-hours extended trading, shares were up $2.73, or 27 percent, at $12.88. Tyco, under fire for an ongoing criminal investigation linked to the indictment last week of its former chief executive on sales tax evasion charges, promised investors last week that it would update them this week about the probe and the CIT deal. By Wednesday afternoon, the company had yet to schedule a conference call for investors, and a spokesman said he did not know when one would be held. Bad news at Tyco, based in Bermuda but run from Exeter, N.H., has been mounting in the last two weeks, and the company's stock is down more than 80 percent this year. On Monday, Tyco ousted its general counsel, Mark Belnick, saying he was being investigated by the company for undisclosed reasons. Earlier, on June 3, longtime chief executive Dennis Kozlowski resigned a day before being charged with illegally avoiding more than $1 million in New York sales taxes on paintings, including works by Renoir and Monet. Three bond rating agencies have lowered Tyco's credit rating on the news. A source with knowledge of Tyco's internal investigation said the probe is moving forward and that while it is focusing on Kozlowski, the activities of other company officials are also being looked at. Among the things the company is investigating is the purchase of homes in New York and Florida for Kozlowski and a home for board member Michael Ashcroft, the source said. A $15 million sailboat Kozlowski is having built for him by a Connecticut shipbuilder is also part of the investigation, the source said. Public filings list Kozlowski as the secured party on the boat transaction and Tyco's Florida office as his mailing address. Corporate governance experts have suggested that Tyco needs to replace several board members because of their ties to the company. They say that without independent board members, the internal probe will lack credibility. Three of the current board members John Fort, Mark Swartz and Joshua Berman are also Tyco executives. A fourth board member Ashcroft was employed by Tyco until 1997. ''Generally, when investors tell you they have lost confidence in the company and the board, which they have with Tyco, it is time to bring in new, independent directors,'' said Paul Lapides, director of the Corporate Governance Center at Kennesaw State University in Georgia. Also, Berman's former law New York Law firm, Kramer Levin Naftalis & Frankel, has done legal work for Tyco for years. Berman played a significant role in that relationship. Berman worked at the firm from April 1985 until February 2000, when he retired, managing partner Paul Pearlman said in a statement Wednesday. ''We, like many other firms, have partners and counsel who are directors of companies that we do legal work for. We believe that such service is appropriate and consistent with our ethical and legal obligations,'' Pearlman said. Upon retirement, Berman retained that title with the firm, but no longer is employed by the firm, Pearlman said. (Oxymoron: Business Ethics---not funny, McGee) ----------------------------------------------------------------------------------------- Eastern Association of Equipment Lessors Crabfeast ---Steve Geller, Leasing News Advisory Board The Maryland crabfeast was attended by close to 90 leasing professionals, all affiliated with different leasing associations. As well as EAEL members, there were attendees who were members of NAELB( National Association of Equipment Brokers), ELA ( Equipment Leasing Association) and UAEL ( United Association of Equipment Leasing ). Despite a temperature in the 90's, as well as a humidity level that high, people were not deterred from a great evening of crabs, beer, crab chowder and, above all, networking. Among other successes, Dennis Horner sold out all his off-lease laptops out of "the back of his truck." E-mail him at dhorner@ssnb.com as he might have more to sell. They were a great buy. I met some of my old ORIX colleagues and alum and got information on others. Many are slowly making the transition to a more normal existence where there probably is more appreciation of talent. Dennis and Nancy Pistorio, along with Alison Prior, are the driving talents behind the success of this event and deserve our accolades. After several years of struggling with cracking crabs, I am still convinced that the "locals" sure know how to do it best. Sitting with Alison and Paul Eidelkind was not that wise a choice for learning the technique. We northerners don't have the patience or the know-how to work over the crabs to get only a small amount of meat. The extremes of futility and "nothing-to-it" are a riot to watch. We usually meet a lot of locals who do not get to other events and national conferences. That is what makes this event great year after year. We would love to find other regional specialties to attract "locals" for networking in other areas. Steven B. Geller, CLP Leasing Solutions LLC 20 Dike Drive Wesley Hills, New York 10952 845-362-6106 fax 845-354-2803 cell 914-552-0842 (How about Lobster in Boston, Massachusetts. People talk about Maine, but Boston has great restaurants and great fresh seafood, including lobster. Editor) ----------------------------------------------------------------------------------------------- Equipment Leasing Foundation Request. We sent you a letter a few weeks ago, to appeal to you for a contribution to the Equipment Leasing and Finance Foundation.... we need your help more now than ever. We hear about the leasing companies going under everyday. Just last week another leasing company is closing it's doors. We need the knowledge, research and education to keep our industry strong...and to teach the next generation. Please, your contribution does help. If $5,000 does not fit in your budget please send what does fit. Looking forward to your help. Thank you. Tom Lisa Tom Wajnert, Chairman Lisa Levine, Executive Director P.S. For more information on the Foundation, please visit our website. www.leasefoundation.org. (I am sure they would accept a $25.00 donation. This is a great foundation to support, but sorry, I am not as flush as last year. Editor) -------------------- Sean Wheeler---Deep Blue Sea Marine According to the National Association of Equipment Leasing Broker Listserve, there is a rumor floating around that Sean Wheeler of 1Lease is back in business. To set the record straight: “I know for a fact that he is still doing business as Deep Blue Sea Marine. I spoke with him this morning and he no longer wants anything to do with the leasing business.”
KenWheeler kennethwheeler@msn.com
(1lease.com is not longer active as a website and the e-mail addresses were removed a long time ago from Leasing News, as they came back. Maybe Sean Wheeler is a lot smarter than a lot of us. editor ) ----------------------------------------------------------------------------- Reader’s React to Leasing News Saluting Chuck Brazier Thank you for today's leasing news. Although I do not know Chuck Brazier, it did my heart good to see his friends in the industry step forward. Rachelle Gansky --- Closing down a business puts a lot of stress on you personally even though you may not have any control over the decision. You are effecting many peoples lives including your own. Chuck and the rest of the ownership at Centerpoint are experiencing something similar to a divorce. Their efforts to keep things going, their goals and business plan has changed. This is when an individuals strength and integrity is tested. I have known Chuck since I was a broker for Colonial Pacific in 1985. I have also worked closely with Chuck while on the United Association of Equipment Leasing board. The comments you are receiving from many of the readers does not surprise me about him. Chuck Brazier has demonstrated unquestionable integrity through this process...not surprising to those who know him. I had the benefit of a sales staff to lean on to help our customers when we closed down Colonial Pacific Leasing. Chuck has taken a personal involvement in reaching out to everyone effected while likely not having taken time to measure what this impact will have on him personally. "Managers do things right and Leaders do the right thing." Chuck is a Leader. It is wonderful to have someone with such integrity in the leasing industry. Curt Lysne c.lysne2@verizon.net ---- Chuck Brazier's classy performance in trying circumstances should come as no surprise. He's always been a class act! Barry Marks --- I too, knew Chuck Brazier and worked with him in the old CPL days. High on his list of virtues is that he "cares". We wish him well and offer any help we might give in this troubled time. Terry Maher TMAHER4444@aol.com Commercial Equipment Finance Albuquerque, New Mexico. --- FIRST CLASS KINDA GUY! ELLIOT KALUS Elsank@aol.com BUSINESS & FINANCE ASSOCIATES, INC. 18400 WEST DIXIE HIGHWAY SUITE D MIAMI, FL 33160 --- I've been reading the comments that you have received regarding Chuck Brazier. I agree with all the great things that have been said about him with a great big "Ditto". I had the pleasure of working with Chuck when we were both employed by Fleet Credit/Denrich Leasing in Miami and am happy to still consider him a friend 10 years after Denrich's closing. Chuck was VP of Operations when Fleet decided to put Denrich "on the block" and he did everything he could to keep the staff as informed as possible as to what was taking place. He was put in a really tough position because he was the one who had to look us all in the face every day when none of us knew if and when we were going to be out of a job. And once we did know that AT&T was purchasing the portfolio and the office was being shut down, Chuck was there trying to help us all find new positions if he could and generally supporting us through a tough time. I still remember that Chuck was the one who gave me a big hug when I left Denrich's office for the last time after 11 years. Chuck is a man of honor, integrity and considerable compassion. I would trust him with my business and my friendship anytime. Dee DiBenedictis SunStar Equipment Leasing dee@sunstarleasing.com
---- I have been delighted to read the various comments that have been made on behalf of Chuck Brazier. There is no one in this industry today more deserving of our collective support than Chuck. I have known Chuck since the days when he was a Colonial-Pacific broker in Salt Lake City. We have worked together on three different occasions; CPLC, Denrich Leasing and at Centerpoint. Believe me when I say that the actions of Chuck Brazier today are no different than they have been for as long as I have known him. Truly, Chuck is one of the "good guys" in our business, known by all who know him to be completely "upfront', honest and sincere. He has always championed and supported the cause of the leasing broker, and I am sure that the past two weeks have absolutely torn him apart. Those in our business who have been bad-mouthing Chuck Brazier should have their mouths washed out with soap. Sure, many of the brokers who have recently dealt with Centerpoint may suffer, but Chuck is NOT where your anger should be directed. I am proud to say that Chuck Brazier is a tough competitor, a person I respect both professionally and personally, and one of my closest friends who brightens my day whenever we have a chance to get together. Mark Speros Mark@lfcinc.com (Leasing News has many more positive reactions, and perhaps may print them tomorrow, and whether we have room or not, they will be forwarded to Mr. Brazier. editor ) Please send to a colleague, as we are trying to build up our readership. No banners, no advertising, and you can quote part or all or any without permission. No obligations to anyone but our readers. We tell the truth ( our readers give us inside information ). editor Needs Leasing Company Name = Barry Bourdage
Phone = 6302081335 x 10 Email = bbourdage@techpro.com Comments = I am a computer reseller, I am selling a system to a state government division, and they would like to lease. I am looking for companies that I can sell the equipment to, and they can do the lease. Barry (Leasing News receives requests for funders and brokers and super-brokers often. We give no referrals, as that would be an endorsement. We try to avoid all conflicts of interest, and print this only as an example of what we receive and normally do not print. editor ) ################### ####################################### Universal Express -- USXP -- Subsidiary to Acquire Go Automotive Leasing Corp NEW YORK--( --Universal Express, Inc. (OTCBB:USXP) today announced the signing of a letter of intent by its subsidiary Universal Express Capital to purchase a well established commercial leasing company with approximately $20,000,000 worth of lease receivable assets.
Go Automotive Leasing Corporation is a 9-year leasing firm that specializes in providing lease financing for businesses nationwide on commercial transportation equipment. "This acquisition is an excellent addition to USXP Capital. The existing credit facilities of Go further establish the foundation and overall business functionality of USXP Capital while its strong performing customer base provides welcome assets to our balance sheets as well as receivable margin cash flows delivering valuable revenue gains," said David Russell, President of USXP Capital. "We are excited to bring on John Gore, who will continue as President of Go Automotive Leasing, and embrace his excellent leadership as director of our commercial vehicle leasing division. With his industry experience and origination ability, a significant impact will be realized on our revenue results," concluded Russell.
"The opportunities in commercial lease financing at present have provided a well suited platform for this acquisition," said John Gore, President of Go Automotive Leasing. He continued, "Our existing lease portfolio continues to perform well and while I will focus on the fundamentals of our business, the Universal Express vision and energy helps position us as a leader in this e |