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www.leasingnews.org Friday, March 29, 2002 accurate, fair and unbiased
news for the equipment Leasing Industry Headlines---- Board
Member of Tyco Unit Owed Millions to 2 Executives Fitch Rates GreatAmerica Leasing Receivables
2002-1, LLC Fitch Ratings Lowers GATX Financial
To 'BBB-/F3'; Rtg Outlook Neg GE Way or the Highway.” Solutions for Employment—New
Web Site Bits and Pieces of the ELA Newsletter Golf Handicap Explained April
11 “Inter-Association Committee” Meeting in Orlando, Florida
and other Equipment Leasing Association
Conferences ###
Denotes Press Release ____________________________________________________________________ Board
Member of Tyco Unit Owed Millions to 2 Executives By
ALEX BERENSON New York Times As
Tyco International) was negotiating last year over how much it would
pay to buy out the public shareholders of its fiber optic division,
an independent director of that unit owed Tyco's two top executives
$14.1 million. Neither
Tyco nor the fiber optic division, TyCom, ever publicly disclosed
that Warren V. Musser, the TyCom director, and Hilary Grinker Musser,
his wife, borrowed the money from L. Dennis Kozlowski, Tyco's chairman,
and Mark H. Swartz, Tyco's chief financial officer, in December 2000.
At the time, the Mussers were in financial distress. Tyco
went on to buy the public shares of TyCom, repurchasing a stake that
it had sold in an initial offering in July 2000. The
round-trip deal proved very profitable for Tyco, although not for
TyCom shareholders. The price of $864 million in stock that Tyco paid
for TyCom in October 2001 was half what it had sold the shares for
15 months earlier. Mr.
Musser was one of three independent directors on TyCom's six-member
board, which accepted the offer from Tyco in just two weeks. The speed
of the deal, and the decline in TyCom's value, spurred several lawsuits
from TyCom shareholders last year, contending that Tyco and TyCom
had not negotiated in good faith. Months
after Tyco and TyCom reached agreement on the deal, the Mussers repaid
the loan, which was backed by Nantucket property they owned. TyCom
builds underwater fiber optic networks for communications companies
and has spent billions of dollars on its own network. Tyco —
which is run from Exeter, N.H., but has its corporate headquarters
in Bermuda — has 240,000 employees and makes everything from
syringes to electronic connectors. Its shares have fallen 45 percent
this year as investors became more concerned about its accounting
practices and growth prospects. Yesterday, Tyco closed at $32.32,
down 33 cents. A
company spokesman, Brad McGee, said in an e-mail message on Tuesday
that the loan carried a market rate of interest, was fully backed
with collateral and was disclosed to the TyCom board. TyCom formed
a special committee of its other independent directors to evaluate
Tyco's offer, and Mr. Musser did not participate on the committee,
Mr. McGee said. The
loan, Mr. McGee said, did not represent a conflict of interest nor
"put Mr. Musser in a position to compromise his fiduciary responsibility
to the shareholders of TyCom." Mr.
Musser did not return calls for comment. On
Dec. 4, 2000, the Mussers borrowed $14.1 million from Mr. Kozlowski
and Mr. Swartz, according to property records at Nantucket's registrar
of deeds. Mr.
Musser was then chief executive of Safeguard Scientifics (news/quote),
a public company that makes investments in information technology
start-ups. A day after the loan was made, Safeguard announced that
Mr. Musser had sold 7.5 million Safeguard shares, or 80 percent of
his stake, to pay off margin loans. In
1999 and 2000, at the height of the Internet boom, Mr. Musser had
borrowed almost $100 million to buy shares in Internet companies,
according to an article in Fortune magazine in March 2001. Mr. Musser,
75, and Ms. Musser, 36, also spent lavishly, according to the Fortune
article, building his-and-hers tennis courts on their Nantucket estate
and spending $100,000 on special garage doors. The
property — which the Mussers named Higgins' Haven, after Mr.
Musser's golden retriever — also has a pool, a main house and
four other buildings, according to Nantucket tax records. Ms. Musser
bought the property for $4.1 million in 1998. As
the Internet bubble burst, the value of Mr. Musser's holdings in Safeguard,
which were worth almost $1 billion early in 2000, plunged. So did
other investments. To repay his loans, Mr. Musser was forced to sell
most of his Safeguard stake, and borrowed $10 million from Safeguard
in October 2000. According
to the Nantucket property records, as security for the $14.1 million
loan, the Mussers provided Mr. Kozlowski and Mr. Swartz a mortgage
on Higgins' Haven and a vacant oceanfront lot next to it. Mr. Musser
also pledged a mortgage on a third nearby property, which the Mussers
planned to develop and sell. The
loan was not disclosed in TyCom's 2001 proxy statement, which was
filed with the Securities and Exchange Commission on Jan. 29, 2001,
or in any other TyCom filings. It was reported by The Philadelphia
Business Journal in January 2001. As
additional security for the loan, the Mussers pledged the furniture
and other personal property at Higgins' Haven. In a handwritten addendum,
Ms. Musser noted that the pledge did not include the couple's clothing,
jewelry or collection of Majolica ceramics. The
loan may have helped the Mussers' personal finances, but Safeguard's
stock price seemed to be little help. On April 11, 2001, with Safeguard
shares trading at $3.72, Mr. Musser resigned as the company's chief
executive. In October, he stepped down as chairman. At
the time, he owed Safeguard $25 million, which he had borrowed in
May in his effort to work out his debts. Still, Safeguard agreed to
pay him a $650,000 annual pension. Safeguard stock closed yesterday
at $3.01, down 97 percent from its high. On
Oct. 4, 2001, Tyco offered to acquire the 11 percent of TyCom it did
not already own for stock worth $14 a TyCom share. The offer soon
led to lawsuits by TyCom shareholders, since Tyco had sold the shares
to investors for $32 in 2000. Tyco
noted that the bid represented a 48 percent premium to the stock's
Oct. 3 closing price, although it was below trading levels for most
of the summer. With the communications industry suffering from a glut
of capacity, the stocks of many telecommunications and equipment companies
fell last year, and the sector has shown few signs of recovery. To
evaluate the offer, TyCom created a special committee of two of its
independent directors, Brenda C. Barnes and Frank P. Doyle. Mr. McGee,
the Tyco spokesman, said Mr. Musser had not been appointed to the
committee to avoid "the appearance of a conflict of interest." Ms.
Barnes, who is also a director of The New York Times Company (news/quote),
and Mr. Doyle did not return calls for comment. On
Oct. 11, Ms. Barnes and Mr. Doyle asked Mr. Swartz, Tyco's chief financial
officer, if Tyco could increase its offer, according to a November
proxy statement from Tyco. The next day, Mr. Swartz agreed to raise
the bid by 4.5 percent but no further. On
Oct. 18, after receiving an opinion from J. P. Morgan that Tyco's
new offer was fair, Ms. Barnes and Mr. Doyle recommended that TyCom
approve the offer. The six-member TyCom board, which included Mr.
Kozlowski and Mr. Swartz as well as Mr. Musser, unanimously agreed. Tyco
and TyCom announced the new terms the next day. At
its current price, the Tyco stock that TyCom shareholders received
is now worth about $10 a TyCom share. According
to Nantucket property records, Mr. Kozlowski and Mr. Swartz released
the mortgage on Higgins' Haven on Dec. 14, 2001. The Mussers replaced
it with a $4 million mortgage from Washington Mutual Bank. ------------------------------------------------------------------------------------------------------------ ############## ################################################## Fitch
Rates GreatAmerica Leasing Receivables 2002-1, LLC CHICAGO--Fitch
rates the GreatAmerica Leasing Receivables 2002-1, LLC $51,698,228
class A-1 notes 'F1+', the $38,294,984 class A-2 notes 'AAA', the
$84,887,215 class A-3 notes 'AAA', the $37,529,084 class A-4 notes
'AAA', and the $10,722,596 class B notes 'AA'. The
class A ratings reflect credit enhancement provided by the subordination
of the class B notes (4.20%), the class C notes (4.25%), the class
D notes (5.35%), the initial reserve account (1.00%), the booked residual
cash flows (5.69%), and the issuer's retained interest (3.00%). The
class B rating reflects credit enhancement provided by the class C
notes, the class D notes, the reserve account, the residual cash flows,
and the issuer's retained interest. The ratings address the timely
payment of interest and the ultimate payment of principal in accordance
with the terms of the legal documents. The
underlying pool of contracts backing the GreatAmerica 2002-1 notes
consists primarily of small-ticket equipment leases purchased for
commercial purposes. The initial collateral balance is approximately
$255.3 million. The pool contains 25,618 contracts with major equipment
types being Copiers, Printers, Telephones, and Fax Machines. In
determining the required level of credit enhancement, Fitch took into
consideration performance of GreatAmerica's past securitizations,
as well as its total managed portfolio. Fitch analyzed cash flow models
and assessed the trust's ability to pay off the notes under various
stressed cash flow scenarios. Cumulative losses on static pools that
have not fully paid down were extrapolated based on the historical
timing of losses. In addition, Fitch applied a haircut to residuals,
while incorporating a front-loaded loss curve to address the potential
timing mismatch of residual receipts and small-ticket losses. Ultimately,
credit enhancement levels were sized to withstand multiples of static
losses at each rating level over the life of the transaction. Headquartered
in Cedar Rapids, IA, GreatAmerica Leasing Corporation originates and
services small-ticket commercial equipment leases to small businesses
through a nationwide network of office equipment and telephone dealers.
Great
America Leasing Receivables 2002-1, LLC, will be the fourth GreatAmerica
securitization rated by Fitch. GreatAmerica Leasing Receivables 2000-1
is the only outstanding term transaction and is performing within
Fitch's expectations. CONTACT: Fitch
Ratings Brigid
Keyes, 312/606-2361 John
Bella, 312/368-2058 Matt
Burkhard, 212/908-0540 (Media Relations) ##################### ############################################### Fitch
Ratings Lowers GATX Financial To 'BBB-/F3'; Rtg Outlook Neg NEW
YORK--(This is a revised version of a press release issued Thursday,
containing updated leverage information in paragraph 4) Fitch
Ratings lowers GATX Financial Corp.'s senior debt and commercial paper
ratings to 'BBB-' and 'F3' from 'BBB+' and 'F2', respectively, and
removes them from Rating Watch. The Rating Outlook is Negative. Approximately
$3 billion of securities are covered by Fitch's actions. While
recognizing GATX Financial's strengths as a solid originator of complex
transactions within well-defined industry niches and asset remarketing
acumen, Fitch's actions were driven by a combination of concerns relating
to the company's liquidity and funding as well as capitalization and
leverage. Management has taken steps in 2002 to bolster the funding
available to the company, including issuing $175 million of convertible
securities at the GATX Corp. level and issuing $364 million of secured
debt. While the financial flexibility of GATX Financial is adequate,
Fitch remains concerned that the company's balance sheet will become
increasingly encumbered as management seeks to source additional financing.
As such, unsecured bondholders may become increasingly disadvantaged.
GATX
Financial has sufficient liquidity and committed funding sources,
including bank credit facilities, to meet current year committed capital
expenditures and debt maturities. However, based on the financing
options currently available to the company, new business originations
are likely to be well below the levels achieved in 2000 and 2001.
This could have an adverse impact on GATX Financial's franchise value
as management may not be as opportunistic as its competitors in sourcing
attractive business. Capitalization
and leverage are also concerns. Fitch evaluates capitalization and
leverage at the GATX Corp. level due to the relative complexity of
the funding structure. This approach highlights the parent's use of
double leverage in providing seemingly sufficient levels of equity
capital to the subsidiary. Leverage, measured by the strictest definition
-- recourse balance sheet debt divided by tangible equity, stood at
4.34 times (x). While GATX Financial has allowed underperforming loans
and leases financed by non-recourse debt to falter in the past, it
is unrealistic that the company would walk away from all the assets
financed in this manner. This action could have an adverse impact
on the company's franchise value and relationships with other institutional
investors participating in the joint ventures. As such, Fitch's calculation
of leverage includes all on- and off-balance sheet debt, non-recourse
debt, and an allocation of non-recourse debt in the joint ventures.
Using this metric, GATX Corp.'s lev erage stood at 8.01x at Dec. 31,
2001, continuing a four-year rising trend. For the rating category,
leverage is high. Fitch
notes that secured debt as a percentage of capitalization, including
off-balance sheet debt, including joint venture debt proportionally
allocated to GATX, stood at 50.88% at Dec. 31, 2001, up from 38.73%
at Dec. 31, 1997. Fitch remains concerned that this trend will continue
thereby negatively impacting the position of senior unsecured creditors.
Additionally, GATX Financial may encounter incremental margin compression
resulting in lower profitability and internal capital formation. A
significant change in either metric may result in additional rating
actions. Based
in Chicago, GATX Financial Corp. is a specialized finance and leasing
company and the principal operating subsidiary of GATX Corp. The company
is one of the largest commercial aircraft and railcar operating lessors
in the world. CONTACT: Fitch
Ratings Philip
S. Walker, Jr., 212/908-0624 (CFA) John
S. Olert, 212/908-0663 James Jockle, 212/908-0547 (Media) “GE
Way or the Highway.” Have
you done any investigation into what is going on with the new GE-Express
Financial Solutions Office, where Colonial business is being directed
now. We are still doing business with them, but feel
that it is crumbling
beneath our feet as we speak. I am very surprised that GE is allowing
a transfer to happen like this, I always thought of them as a first class
outfit, but who ever was in control of this transfer is MIA. I
think you will be surprised at what is uncovered. (
Name With Held ) We
reported on Wednesday that two CPL employees threw up their hands and
returned to Oregon. Thursday we also printed their good-bye. We
have had several reports of “sick out,” but GE is not talking,
and the employees and people, like yourself, who are dealing with
this office are afraid to not only tell us more, but sign their name. When you sign your name, you give a lot more
credence to the eMail. GE bought the
company and wants to run it the “Neutron Jack” way. They have been a highly successful
company, who’s top executives become CEO of major companies. It evidently
is either the “GE Way or the Highway.” ############# ####################################### SOLUTIONS
FOR EMPLOYMENT PositonFiller,
LLC 770
Great Highway #B San
Francisco, CA, 94141 FOR
IMMEDIATE RELEASE (March 28, 02) - PositonFiller, LLC,
an employment company specializing in placing sales,
management, marketing and technology professionals
based in San Francisco, CA, has launched its
employment site (www.positionfiller.com), a new Internet
service offering a carefully compiled searchable
database of professional resumes. PositionFiller,
LLC is intending to change
the way of recruiting
by allowing companies to search, post, and receive
resumes automatically free of charge.
Compared to
other employer paid competitors, PositionFiller, LLC provides
a cost effective way for all companies to fill their
hiring needs. "The site
offers one centralized stop
on the Internet containing a vast collection of carefully
edited and compiled resources." says Don Franks,
President and CEO. ### ################################# (Employees
pay $39.99 for one month, $49.99 for two months, $69.99 for three
months plus a 30 minute interviewing and resume consultation with
experienced recruiters. (Leasing
News besides the classified ads of jobs wanted http://65.209.205.32/LeasingNews/JobPostings.htm help wanted http://65.209.205.32/LeasingNews/JobPostingsWanted.htm outsourcing http://65.209.205.32/LeasingNews/JobPostingsOutsourcing.htm attorneys http://65.209.205.32/LeasingNews/JobPostingsAttorney.htm also has
a recruiter section of those who specialize in the leasing industry:
http://65.209.205.32/LeasingNews/Recruiters.htm plus
other places to post jobs http://65.209.205.32/LeasingNews/Classified.htm Some
are free, some charge money as Positionfiller.com does. editor ) Bits
and Pieces of the ELA Newsletter **************************** Equipment
Leasing Association ELT E-Leasing Newsletter 3/28/02 ******************************** The
Equipment Leasing Today E-Leasing Newsletter is published every Thursday and
is sponsored by the Equipment Leasing Association and its co-sponsor.
To Get
Full-Text Stories, go to the web page associated with the story you
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read. The links to news stories require an ELA MEMBERS-ONLY NAME AND PASSWORD.
To receive a password, please contact Daniel Aubain at database@elamail.com
or phone 703/516-8377. NOTE:
Address change/unsubscribe instructions and contact information can
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at the end of this e-mail. If you received this e-mail (but it was
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Hill ****************************** It
was reported in the March 25th edition of the American Banker that several
hundred bankers attending the American Bankers Association's (ABA) legislative
summit had just spent the day on Capitol Hill doing their annual grassroots
lobbying. "It
took a long time for the banking industry to convince Congress to eliminate
the prohibition on interstate banking," observes ELA's V.P. Federal
Government Relations, Steve Fier. "And it took an even longer
time for
them to convince Congress to deregulate them and allow them to engage
in securities,
insurance and real estate activities. But the laws were ultimately
amended in a pro-banking manner primarily for one reason: because hundreds
of bankers go up to Capitol Hill every year and meet with their members
of Congress," says Fier (who himself was once an ABA member back
in the
early '80's). "I've known many of the ABA lobbyists for years,
and without
hesitation they would all tell you that at the end of the day, members
of Congress don't do things for them, they do them for their bank constituents
back home, and that's why the ABA brings it members to Washington
and sends them up to Capitol Hill every year". To
date 60 ELA members have registered for ELA's Capitol Hill Day. "As
an industry
that employs over 200,000 people and that will provide over $240 billion
in financing for productive assets in 2002 alone, we must get our message
out now so that whenever Congress acts, it clearly understands the impact
of its actions on the industry, its customers, and the U.S. economy," Fier
says. ELA members are the best messengers and lobbyists we have",
Fier said.
There are 435 members of the U.S. House of Representatives and 100 U.S.
Senators, all of whom get to vote on every piece of legislation as
its ultimate
fate is being decided. That's a lot of ground to cover. Here's
what Professor Peter Drucker, the noted authority on corporate management
says on this topic: "Few relationships are as critical to the business
enterprise itself as the relationship to government. The manager has
the responsibility for this relationship as part of his responsibility to
the enterprise itself. To a large extent, the relationship to government results
from what businesses do or fail to do." "The
bottom line," Fier said, "is that members of Congress know
that business
people who are willing to take time away from running their business
to visit them in Washington are people who vote, and that's why they
will listen to what ELA members have to say when they go up to Capitol Hill
on April 10th". Senator
Bob Graham (D-FlA), a distinguished member of the Senate Finance Committee
and chairman of the Senate Select Committee on Intelligence, will be
talking to attendees Tuesday evening, April 9th. Register
today at www.elaonline.com/events/2002/capthillday. There is no registration
fee and you still have time to schedule your Hill visits. (Contact
ELA's Bridget Alexander with questions at 703-516-8381 or at balexander@elamail.com). *************
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