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www.leasingnews.org Tuesday,
June 4, 2002 Accurate,
fair and unbiased news for the equipment Leasing Industry
Headlines---- CIT
Group President Al Gamper says, “ Oh, Sh*t !!!”
( full round-up of all news re: Tyco-Cit )
Bank Earnings Rise to New Record of $21.7 Billion
Telemark Back Up for Sale?
The Funding Tree---All Monies Still Not Returned
Bill Graneri’s Top Gun Seminar Series http://www.eael.org/event_calendar.htm#Crab%20Feast
Credit card companies' late fees hit record high
San Jose Symphony Declares bankruptcy
ePlus New Manage V3.0
Norstan President Granger Named to IDS Board
Steve LeBarron to Northern Consulting ###
Denotes Press Release “I
am looking for someone who can get Federal Deals done as an East Coast
Manager for a captive. “Know
anyone who lives in DC or would want to live there and manage a captive
leasing program?”
Fred
fstlaurent@cfl.rr.com CIT
Group President Al Gamper says, “ Oh, S**t !!!” Here
is a current round up of events ALEX
BERENSON New York Times .Dennis
Kozlowski resigned as chairman and chief executive of Tyco International
Ltd. yesterday as prosecutors in Manhattan sped ahead with a criminal
investigation into whether he had evaded sales taxes on the purchase
of millions of dollars' worth of art. An
indictment may come as early as today, according to two lawyers
knowledgeable about the inquiry. Tyco's board demanded Mr. Kozlowski's
resignation, a person close to the board said, after emergency conference
calls that began on Sunday and ended yesterday morning. Even
among legions of highly paid chief executives, Mr. Kozlowski stood
out. Prosecutors
in the office of the Manhattan district attorney, Robert M. Morgenthau,
say they believe that Mr. Kozlowski bought $8 million to $12 million
in paintings from dealers in New York for his Fifth Avenue apartment,
according to several people who have been briefed on the inquiry.
The investigation, which began with a tip in January, has widened
to include other dealers and collectors. Mr.
Kozlowski shipped the paintings to Tyco's headquarters in New Hampshire
to avoid paying New York sales tax before returning the paintings
to his 13-room apartment on Fifth Avenue, these people said. In
some cases, they said, dealers simply shipped empty cartons to New
Hampshire and delivered the art directly to Mr. Kozlowski's apartment.
They said the practice enabled Mr. Kozlowski to avoid $650,000 to
$1 million in taxes. The combined city and state sales tax in Manhattan
is 8.25 percent. Mr.
Kozlowski has hired Stephen E. Kaufman, a leading criminal defense
lawyer whose clients have included Leona M. Helmsley and Michael
R. Milken, to represent him. Mr. Kaufman declined to comment yesterday
and said Mr. Kozlowski also would not comment. Mr.
Kozlowski's sudden resignation deepened the crisis at Tyco, a conglomerate
that makes everything from security systems to medical equipment
and has a quarter-million employees. Tyco's stock has lost three-
quarters of its value this year, leaving investors $85 billion poorer.
The investigation of Mr. Kozlowski's purchases throws into high
relief questions of corporate and executive responsibility that
have disturbed investors since the collapse of Enron last year. As
it grew in the late 1990's, some analysts and investors criticized
Tyco for what they saw as opaque accounting practices and for its
1997 move to Bermuda to avoid paying some United States taxes. But
big investors cheered Tyco's seemingly steady earnings growth, and
the company's stock soared. Now
the questions that Wall Street, and Main Street, ignored during
the boom have come center stage, said Jeffrey Sonnenfeld, associate
dean of the Yale School of Management. "For
several years now, people were afraid to challenge what they didn't
understand," he said. "It's only since October, or really
since January, that we've seen the unraveling." If
Tyco cannot raise cash and regain investors' confidence by selling
assets, it may face a cash squeeze, some analysts say, with $12
billion in debt coming due by the end of next year. "They
are definitely in snow, and I don't know how good their snowshoes
are," said Nicholas Heymann, an analyst at Prudential Securities
who rates Tyco as a hold. "This has been a shock to investors." The
Standard & Poor's stock index of major companies fell 2.5 percent
yesterday. Stock analysts said Mr. Kozlowski's departure had unnerved
the markets. The
resignation of Mr. Kozlowski represents the end of the stock market
boom of the 1990's, Mr. Sonnenfeld said. "He is the epitome
of a group of swashbuckling C.E.O.'s who came along in the last
decade who called themselves, audaciously, the serial acquirers." Mr.
Kozlowski was the most aggressive of all, Mr. Sonnenfeld said. Other
executives, like Bernard J. Ebbers, who lost his job in April as
chief executive of WorldCom, confined themselves to one industry.
Mr. Kozlowski sought to build a giant multi-industry corporation,
following in the footsteps of the conglomerate builders of the 1960's,
like Harold Geneen of ITT. Conglomerates
usually fail, because running a diverse group of companies is much
harder than buying them, Mr. Sonnenfeld said. "The incredible
ego that these folks have, people who believe they're born with
some transcendent business sense," Mr. Sonnefeld said. "They
tend to build these empires in their own image." In
a statement yesterday morning, Tyco said Mr. Kozlowski had resigned
"for personal reasons." But a person close to the board
said that the directors had demanded Mr. Kozlowski's resignation.
If it had fired him, Tyco would have probably had to pay Mr. Kozlowski
a severance package of at least $120 million, this person said.
Because he resigned, Tyco says it has avoided that obligation and
plans to negotiate a new exit deal. But Mr. Kaufman, Mr. Kozlowski's
lawyer, declined to comment on whether his client would seek payment. Mr.
Kozlowski also resigned yesterday as a director of the Raytheon
Company. Tyco
said John F. Fort would succeed Mr. Kozlowski as interim chairman
and chief executive. Mr. Fort was Tyco's chairman from 1982 to 1992,
when Mr. Kozlowski became head of the company. The
investigation and resignation are a stunning end to Mr. Kozlowski's
career as Tyco's top executive. Over the last decade, Mr. Kozlowski
steered the company to acquire hundreds of other companies. Tyco's
earnings soared in the 1990's, and the company became a favorite
of big investors. From 1992 to 1999, its stock rose fifteenfold. Mr.
Kozlowski, the son of a Newark police detective who became an accountant
after attending Seton Hall University, has made hundreds of millions
of dollars selling Tyco shares, and his profile has steadily climbed.
He became a yacht racer and a backer of the New York restaurateur
Nello Balan. In 2000, he bought an $18.5 million apartment on Fifth
Avenue. But
Tyco's shares and Mr. Kozlowski's career have collapsed this year,
under harsh questions about the company's accounting and business
practices. Tyco,
which is based in Exeter, N.H., moved its nominal headquarters to
Bermuda in 1997 to avoid United States taxes on foreign sales. The
company's accounting practices are highly complex, and although
it reports billions of dollars in profit every year, its debt has
swelled to $24 billion. After
Enron's collapse, Tyco came under fresh scrutiny and was then damaged
by troubling disclosures and abrupt changes in its business strategy
In
January, Mr. Kozlowski said Tyco would reverse its decade-long strategy
of acquiring other companies and would split into four independent
companies and spin off its plastics division in a private sale.
Investors were alarmed in February by the disclosure that Mr. Kozlowski
and Mark H. Swartz, Tyco's chief financial officer, had quietly
sold $500 million in company stock since 1999 while saying publicly
that they rarely if ever sold shares. ---
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. ----- Sweet
Contract May Well Be All for Naught By
FLOYD NORRIS New York Times On
Jan. 22, 2001, just one week before shares of Tyco peaked, the company's
board awarded L. Dennis Kozlowski a new contract that called for
him to remain chairman and chief executive until Nov. 16, 2008,
his 62nd birthday. He was given eight million shares of restricted
stock, then worth $485 million at the market price for unrestricted
stock. That
contract was unusual in many ways. For starters, it said that the
only reason Mr. Kozlowski could be fired for cause was if he was
convicted "of a felony that is materially and demonstrably
injurious to the company or any of its subsidiaries or affiliates,
monetarily or otherwise." And even with such a conviction,
it would require a vote of three-quarters of the board to fire him. That
contract provided for generous severance benefits if he was fired
without cause, or if he resigned for "good reason," a
term that included a reaction to a board reduction of his duties. Brad
McGee, a Tyco spokesman, said yesterday that the "contract
became void upon his resignation" but that the board planned
to negotiate with Mr. Kozlowski about severance benefits. He estimated
the value of the severance under the contract at about $120 million
and said he did not know whether Mr. Kozlowski agreed that it was
now void. Under
the existing deal, Mr. Kozlowski would be entitled to an immediate
payment of almost $17 million, plus a bonus for the part of the
current fiscal year that he worked. He would also receive a lifetime
consulting arrangement that would pay him $137,500 a year. In addition,
he would receive all the benefits he has been accustomed to receiving,
including "access to company aircraft," as well as to
cars, offices and apartments. And
the scale of his benefits now can be appreciated by noting that
last year's company-paid premium on his life insurance policy, including
the amount it paid to cover his taxes on the premium, came to $3.8
million. The company did not disclose the face amount of the policy,
but the contract provided he would keep the policy for life, with
the company continuing to pay the premiums. -----
NEWS
ANALYSIS A
Prime Example of Anything-Goes Executive Pay By
DAVID LEONHARDT New York Times Even
as a boom in executive pay brought vast wealth to nearly every person
running a large American company, L. Dennis Kozlowski still stood
out. During
his rise to become one of the nation's more prominent chief executives,
Mr. Kozlowski persuaded his board to give him hundreds of millions
of dollars' worth of cash, stock and perquisites. Now, with the
rapid decline of his reputation, culminating in his departure yesterday
as the chief executive of Tyco International, Mr. Kozlowski has
come to highlight nearly every controversy surrounding executive
pay. Mr.
Kozlowski received a guaranteed salary so large that it cost Tyco
a tax deduction. He took home tens of millions of dollars of pay
that supposedly reflected his improvement of the company's performance.
Yet Tyco still lent him millions of dollars and he has quietly sold
more than $300 million of Tyco stock back to the company since 1999
— even as he was claiming to have sold little or no stock. Incongruously,
Mr. Kozlowski also
looked for ways to save amounts of money that represented a pittance
of his wealth. Rather than waiving the fee to sit on his own board,
as most executives do, he received $75,000 last year, according
to a Tyco filing. To avoid paying state sales taxes on art he bought,
he shipped the works — or empty boxes, in some cases —
to other states, prosecutors say. That
last move cost him his job, insiders said yesterday, in the latest
sign that executives who seem to have abused their position are
now more likely to suffer consequences — rather than merely
criticism or slaps on the wrist — than in the recent past.
Executives still have enough control over their own compensation
to prevent widespread pay cuts, corporate governance experts said,
but the anything- goes ethos of the late 90's seems to be receding. For
example, Bernard J. Ebbers, the former chief executive of WorldCom,
lost his job in April partly because of the contrast between his
pay and his company's woes. Christos M. Cotsakos, the chief executive
of E*Trade, said last month that he would forfeit almost half of
his $80 million in 2001 pay in response to criticism, including
an investor lawsuit. Members of the Rigas family, who founded Adelphia
Communications, gave up most of their board seats last week after
investors had learned of loans from the cable company to the family. This
kind of turmoil, combined with the accounting problems highlighted
by the demise of Enron, has left many people wondering whether the
soaring corporate profits of the late 1990's were at least partly
a mirage created by executives who stood to benefit from the advance
of their company's stock. Shares
of Tyco — a conglomerate that Mr. Kozlowski built by buying
one company after another and that now makes an array of products
from burglar alarms to syringes — closed at $16.05 yesterday,
down $5.90. The stock has fallen from almost $60 late last year
as investors have become worried that Tyco used complicated accounting
techniques to inflate its profits. Tyco
executives have defended their practices as legitimate. But in a
sign of the shifting corporate terrain, Tyco's board no longer seems
willing to pay Mr. Kozlowski so generously. During
negotiations last weekend, Mr. Kozlowski agreed to resign. As a
result, he is not eligible for a severance package that could have
exceeded $100 million, the company said. Tyco's directors will negotiate
a new severance deal with him. Over
the last three years, the board paid Mr. Kozlowski $19 million in
cash and perks and almost $80 million in stock, according to company
filings. It also gave him 13.4 million stock options — many
more than most chief executives received — but many of the
options will become valuable only if Tyco's stock recovers from
its slump and eventually returns to its earlier highs. Mr.
Kozlowski's pay last year included a base salary of $1.65 million.
In the early 1990's, Congress adopted a law preventing companies
from claiming a tax deduction on any pay above $1 million that is
not based on a company's performance. In
all, Mr. Kozlowski made "an egregious amount of money,"
said Judith Fischer, managing director of Executive Compensation
Advisory Services, a research company in Alexandria, Va. "In
any peer group, he would be considered very well paid." Mr.
Kozlowski was the chairman of Tyco's board until yesterday. The
head of the compensation committee is Stephen W. Foss, a manufacturing
executive who has been on Tyco's board since 1983. Individual
cases aside, most boards still seem willing to allow chief executives
to dictate much of their own pay. Last year, median total pay for
executives at large companies increased 9 percent even as profits
fell 35 percent, according to a study of 200 companies by Pearl
Meyer & Partners, a consulting firm in New York. But
investors, who have long had little power over executive pay, have
begun to agitate for more of a voice as stock prices and pay have
moved in opposite directions. At
a few companies, large investors have fought company requests to
set aside millions of shares of stock to use for employee stock-option
grants. In a rare victory for opponents of such packages, Jones
Apparel, a maker of clothing and shoes, withdrew a stock-option
proposal last month. Other
companies, however, have fought the opposition; they received a
lift this year when the Securities and Exchange Commission ruled
that companies can ignore some shareholder requests for a vote. But
that will not end the fights. Later this week, the New York Stock
Exchange is expected to announce a proposed set of rules that would
require companies listing their shares on the Big Board to receive
stockholder approval for all new option proposals. Currently, shareholders
do not vote on broad-based plans that award options to executives
and lower-level employees. At
other companies, investors have introduced resolutions asking companies
to change their severance packages for executives or otherwise rein
in pay. The resolutions have been receiving a greater share of votes
than they did in previous years, according to the Investor Responsibility
Research Center in Washington. But
few of the resolutions are binding. "The action on the shareholder
front this year is extraordinary," Ann Yerger, director of
research at the Council of Institutional Investors, which represents
large investors. "But that doesn't mean it's going to influence
company behavior." For
now, only the very largest piles of money, like Mr. Kozlowski's,
seem at risk of collapsing under their own weight. ----
Remember
When--- CIT
(3/2001) Tyco International Ltd. makes offer for about $9.2 billion
in cash and stock in a deal that would allow the manufacturer
to finance purchases of its wide array of products. Bermuda Hq,
N.H. operation office. ( 2/2001) Closing Atlanta office and others,
"freeze" on new broker business. June
20,2001 CIT
CEO Files to Sell Shares Worth $28 Million
By Laura Smitherman, Bloomberg
Albert Gamper, who got $16 million of restricted stock to stay
at Tyco
International after the company bought CIT Group, filed to sell
about 518,000
shares in his new employer. That stock is worth $28 million at
the current price.
Gamper was CIT Group's chief executive when Tyco acquired the commercial
lender in an $8.7 billion transaction. The executive agreed to be
CEO of the
financing unit of Tyco.
Under a previously disclosed contract, Gamper gets 300,000 restricted
Tyco
shares and options for 1.2 million shares to remain with Tyco.
Gamper filed to sell Tyco stock he acquired through the exercise
of options,
according to filings with the Securities and Exchange Commission.
Tyco shares
fell 61 cents today (6/19/01) to $54.14.
The SEC form used by Gamper signals an intent to sell, and filers
aren't
obligated to sell any or all of the shares listed. Gamper last sold
nearly 45,000
Tyco shares June 4 for $2.5 million in gross proceeds, according
to the filings. CHRONOLOGY
- Tyco's history under Kozlowski
NEW YORK- Following are key dates in
Dennis Kozlowski's term as chief executive of
conglomerate Tyco International Ltd. (NYSE:TYC - News)
July 1992 - Dennis Kozlowski is named chief executive
of Tyco after serving as the company's chief operating
officer since 1989. The company, then mostly known for
its fire protection and large valve business, is worth
about $3 billion.
July 1994 - Tyco tackles first big-ticket acquisition
under Kozlowski, purchasing Kendal International, maker
of Curad bandages and other medical products, for $1.4
billion.
July 1997 - Tyco acquires burglar alarm and security
firm ADT Ltd. Structured as a reverse merger, ADT
technically bought Tyco and changed its name to Tyco
International. The company moves its headquarters to
Bermuda, where ADT is based.
April 1999 - Tyco purchases electronics maker AMP Inc.
for $11.3 billion in stock.
October 1999 - Short-seller David W. Tice questions the
use of large reserves related to acquisitions, saying
they obscure results.
December 1999 - Tyco says the Securities and Exchange
Commission is conducting a nonpublic, informal inquiry
into charges and reserves linked to the company's
acquisitions.
June 2000 - Tyco says it has amended earnings per share
for fiscal 1999 and the first quarter of fiscal 2000
after the SEC review. The company also agrees to
acquire health care firm Mallinckrodt for about $3.1
billion in stock in a deal making the company the
world's No. 2 medical device maker.
March 2001 - Tyco enters the financial services
business when it agrees to acquire commercial finance
company CIT Group Inc. for about $10 billion.
January 2, 2002 - Tyco denies the SEC is launching a
new investigation of the company after research company
SEC Insight Inc. issues an alert on Tyco.
January 22, 2002 - Tyco says it plans to separate into
four independent publicly traded companies: security
and electronics; health care; fire protection; and flow
control and financial services. The company says the
move should unlock tens of billions of dollars in
shareholder value. Tyco also says it plans to sell its
plastics unit.
January 30, 2002 - Kozlowski and Chief Financial
Officer Mark Swarts say they will each buy 500,000
shares of Tyco's stock, which had fallen to its lowest
share price since the company's SEC investigation in
1999.
February 4, 2002 - Tyco says it spent more than $8
billion on more than 700 acquisitions in the past 3
years that it did not separately announce to the
public. Standard & Poor's and Fitch ratings cut the
company's credit ratings.
March 11, 2002 - Two groups of private equity firms
offer to buy Tyco's plastics business.
March 12, 2002 - Tyco says it is on track to spin off
CIT into an independent company by May, but also says
it might sell off a piece of CIT before the move.
March 20, 2002 - A team of private equity firms
approach Tyco with a proposal to buy a minority stake
in CIT group for up to $1.5 billion. General Electric
Co. (NYSE:GE - News) says it has no interest in
acquiring CIT.
April 24, 2002 - Sale of the company's plastic unit
stalls because Tyco fails to come up with key financial
data and may need to lower the unit's earnings forecast
for the year.
April 25, 2002 - Tyco says it abandoned its plan to
split into four companies, calling the strategy a
mistake, and reported a $1.9 billion net loss in the
March quarter, in a stunning about-face. CIT files for
initial public offering for as much as $7.15 billion.
May 24, 2002 - Investment bank Lehman Brothers
allegedly withdraws a $5.0 billion offer for CIT after news of
the offer was leaked to the media.
June 3, 2002 - Kozlowski resigns abruptly amid mounting
criticism of his flip-flopping corporate strategy and
news he is under investigation for avoiding personal
taxes. Former CEO John Fort, a current board member who
headed the company from 1982 to 1992, will assume
"primary executive responsibilities" for an interim
period while Tyco looks for permanent successor CEO
Departure, Failed Lehman Bid Hurt CIT IPO By
Jake Keaveny, Reuters Wall
Street's biggest stock offering this year, Tyco International's
sale of its finance arm, is getting smaller by the minute. The
resignation of Tyco Chief Executive L. Dennis Kozlowski was the
latest snag in the sale planned for this month. Backed against a
wall by a $27 billion debt load, Tyco will probably have to slash
the price to complete the sale on schedule, investors and bankers
said. Ten
days ago, Lehman Brothers, one of Tyco's advisers, retracted its
$5 billion offer, making an initial public offering more likely
than an outright sale. That was like putting up a "clearance
sale" tag from the $7.15 billion it had hoped to raise, and
potential investors are likely to ratchet down the price, investors
and bankers said. "The
IPO is tainted," said Oak Ridge Investments President David
Klaskin, an owner of Tyco stock and potential buyer of the CIT IPO.
"I wouldn't expect them to do much better than ($5 billion)." The
timing of Kozlowski's departure has left investors scratching their
heads. Many had assumed Tyco would wait until after the CIT sale
before shaking up its management. "People
were expecting some management changes," said Prudential Securities
analyst Nicholas Heymann. "But they weren't expected until
after the monetization of CIT." Kozlowski
told his replacement, John Fort, that he left his high-profile position
because of a probe into whether he evaded New York sales taxes,
according to a source familiar with the situation. Tyco said the
CIT offering, which would be this year's biggest, is still on track. Lehman's
lengthy history with CIT and intricate knowledge of its business
casts an ominous shadow on the sale. It's as if someone went over
the company with "fine tooth comb, and found something wrong,"
said Oak Ridge Investments' Klaskin. Lehman
helped advise Tyco when it bought CIT for $9.5 billion about a year
ago. It worked with Goldman Sachs, to try to sell the unit to potential
bidders like GE Capital and Wells Fargo earlier this year, but investor
allegations that Tyco used improper accounting for acquisitions
-- something it has vehemently denied -- hampered a deal. "Clearly
(Lehman's bid) didn't help the value," said Brian Bruce, a
director at Boston-based PanAgora Asset Management, who owns Tyco
stock. "Trying to spin this off and not getting good value
is frustrating." A
person close to the situation said Lehman's decision to retract
its bid 10 days ago had nothing to do with the strength of CIT's
balance sheet or business. The investment bank was not in a position
to close the deal at the time the news was leaked to the press,
he said. Tyco
wants to avoid further credit rating downgrades caused by its heavy
debt load, which have already pushed up its borrowing costs. The
company could get by on as little as $4 billion to $5 billion from
a CIT deal to cover its near-term financing needs, Credit Sights
analysts Glenn Reynolds and Patricia Lee wrote in a recent report.
Tyco has said it has enough cash to meet its debt payments through
next February, although it has $3.25 billion of financing needs
in second quarter 2003. At
a lower price, CIT becomes more attractive, investors said. The
94-year-old company has a strong brand name and $48 billion of assets
in areas ranging from machinery financing for small businesses to
loans to all of the U.S. and Canadian railroad operators. "It's
akin to a distressed sale situation because the company needs to
raise capital rather than it getting out at a peak multiple,"
said an investor, who declined to be named. The investor, who often
buys companies that are targets for acquisition, said he's interested
in buying CIT shares. Lehman's
bid of $5 billion -- about 10 times CIT's expected forward 12-month
earnings -- is actually close to fair value, Credit Sights analysts
Reynolds and Lee said. That
would be a slight discount to the 11 to 12 multiple for Household
International, a company similar to CIT but in some higher- margin
financing businesses. Even
so, investment bankers familiar with the sale caution against comparing
an IPO with an outright acquisition. In
a depressed stock market, companies can often fetch a higher value
from an IPO than a private sale. Acquirers focus on the health of
a company's balance sheet, so assuming debt or issuing stock for
big purchases is riskier than during a boom market, when growth
and profits are the goal. Citigroup
Inc. opted this year to spin off Travelers Property Casualty Corp
rather than sell it outright, and Loews Corp. took a similar approach
with its Carolina Group Inc. ----------------------------------------------------------------------------------------------- Bank
Earnings Rise to New Record of $21.7 Billion Net
Interest margin improvement at large banks give lift to profits, |