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September 4, 2001 --------------------------------------------------------------------------------------------- also sent by e-mail, including the “This Day in American History” signature---please ask to subscribe to kitmenkin@americanleasing.com ---------------------------------------------------------------------------------------- Headlines--- Textron Closes Mfg & Tool Division Charles Lester on American Express “Ka-Boom” Compaq/HP and Will the Regulators Approve Merger Triton, Popular Leasing U.S.A. to Expand ATM Leasing Manufacturing activity drops for 13th straight month, but signs of turnaround seen BuyIt Software/; Leasing Option Allows Cash-Lean Businesses to Purchase Needed Software and Services Oracle's Larry Ellison pulls in $706 million on stock options Four Sr. Corp, Attnys Join Sidley Austin Brown & Wood's New York Office Comdisco Receives Court Approval/ Bidding Procedures for Sale of Leasing Biz Leasing News List Up-Dated Tomorrow Joanie Dalton Drives a “Mom’s” Car---- _______________________________________________________________ Textron Closes More Leasing Divisions Enjoy your updates and info. Something you may not know yet. Textron Financial has put the clamps on another division. As of today the Manufacturing & Machine Tool Division is to close. It appears Textron did not get what they were looking for in this division. With FTC it's all ROE. I understand that Fred Hockman (President of the Machine Tool Division) is looking to find another leasing company to sell his package to Please omit my name to this for reasons I am sure you understand. ( Name Withheld ) __________________________________________________________________ Louis Schneider Interview Corrections In your interview with Lou Schneider of Preferred Lease, the article mentioned the company was marketing a credit card concept originated by "Transworld Leasing". The company was actually Trans Leasing International, Inc., of Northbrook, Illinois, and the card was the LeaseCard. Brian Cascarano BCASCARANO@IFCCREDIT.COM VP Marketing IFC Credit Corporation ~~~ Portfolio to Rudy Trebels The
on line version
was corrected. The
fact as stated by
Mr. Schneider is
the which was a typo not caught in the newsletter version. Advanta would syndicate or sell-off its lease purchases. To understand more about this procedure, you may want to read below __________________________________________________________________ Charles Lester on American Express “Ka-Boom” Leasing News does not want to prematurely hinder the investigation by American Express and are awaiting to see what action they may or may not take. In the meantime, Leasing News Senior Advisory Board member was asked to help us out, and perhaps we have to start with the basics so we are all on the same page. First,
who is Grandpa Charlie. He has contributed articles, stories, Sunday Sermon, ( it is reported he leased the machinery and tools for Noah to build the ark: ) “-After
a 19 year sales
and management career
with IBM, Charlie
settled in Atlanta
and “-After
his two-year contract
was honored, he
resigned and sat
out his non-compete
To understand what went wrong, you need to understand how discounting a lease and a private label program works. Discounting
leasing is when
you have a lease
contract with your
name on it and or non-recourse, but it certainly will have “representations and warrants.” Sierra Cities bought many discounters local operations and combined them into one, calling it a Private Label Program. They offered the ability to continue to discount plus to accumulate leases and syndicate them to the public for a better rate of return; a better margin and more liberal credit policy. Westinghouse, CIT, Heller, Textron, and of course, GE also have private label programs, but Sierra Cities carried the Colonial Pacific Pegasus program one step further. In fact, this division was making a $20 million annual profit from its inception. What made it so successful: Oren Hall, Mark McQuitty, Jim Raeder, Charlie Lester, Fred Van Etten, Mike Wing and others were in leadership capacity What went wrong? LN. I think you should explain what the Sierra Cities private broker program worked to understand RW Professional Leasing as a Private Label Recourse broker. GC. A Private Label Recourse broker has a contract with a funding source to buy deals at a buy rate 150-250 basis points lower then their non-recourse brokers. In return, the recourse broker is responsible for the collection of all monthly payments and in the event of default, to repurchase the entire lease contract. The recourse broker may also receive an even lower buy rate for handling all personal property and sales taxes. LN. As you know I have two ex-board of directors, plus others who were directly involved regarding this issue. In Friday’s news, Leasing News reported that Republic Group and RW Professional Leasing were addressed in a company wide conference call on August 23rd as possible portfolio problems within Amex. They were part of the Private Label Program. What was the telephone call about? GC. I’ve got to say a good word about Rich Tambour. He should be admired for having the courage to address these issues that had been spreading in the Houston rumor mill since the American Express acquisition of First Sierra , earlier this year. Like it or not, he was forced to address the rumors to let Amex employees know that executive management was aware of the issues... and steps were being taken to address them. He addressed both as issues instead of problems, so he did not make any accusations, which is fair to everyone. My hat is off to Mr. Tambour. I hope you print this. LN. Yes, the telephone call was made, and this is coming out more in the public. How do you think American Express is going to handle this? GC. As far as the Republic Group issue, there have been internal debates by First Sierra employees regarding the quality of the Republic portfolio since the acquisition of the Republic Group in 1998. At the time of acquisition, the Republic Group had a reputation as being an extremely high yield, high volume producer. A number of First Sierra employees and former owners, including me, questioned how good the portfolio quality could be with yields in 20-25%+ category. I had many suspicions.
Some felt the Republic Group had the greatest salespeople with the best organizational structure that the industry had ever seen. They were doing extremely well. This was the young generation. Others didn’t feel that way. Mostly we older guys. However, at this point it seems to be a moot issue since the pooling of assets has taken place, and I don’t know the performance of the portfolio. Everyone is guessing, but they don’t know. If there is a problem, American Express will probably have to take the hit no matter what happens. As far as RW Professional Leasing is concerned, Barry Drayer at RW has been a respected Private Label Recourse broker at Denrich, ATT and First Sierra since 1991. American Express must investigate their issues with RW quickly and issue a full apology and pay damages or proceed with legal actions if the recourse agreement has been breeched by RW.
( Leasing News will continue this conversation with Charlie Lester tomorrow ) ------------------------------------------------------------------------------------------------ ### ################## ################# ################ Triton, Popular Leasing U.S.A. Lend a Hand to Businesses By Expanding ATM Lease Financing Options
Agreement Expected to Strengthen Triton's Ongoing Boom in Domestic ATM Shipments LONG BEACH, Miss., / -- Triton and Popular Leasing U.S.A., the American leasing arm of Puerto Rico-based Banco Popular, have signed an agreement that will make affordable ATM lease financing products available to a wide range of businesses. The new program will include longer lease terms, lower down payments, and more aggressive credit scoring. To make the new leasing program as attractive as possible, Triton has structured an innovative collaborative arrangement with its distributors to co-provide limited financial recourse as well as remarketing services to Popular Leasing in the event of lease defaults. The new agreement formally designates Popular Leasing as Triton's preferred leasing provider. Popular Leasing will provide lease financing for Triton ATM units to such businesses as convenience stores, restaurants, and other retail establishments. The new program makes it possible for businesses with a wide range of credit ratings, including those that have been in operation for as little as six months, to obtain lease terms of 60 months, significantly longer and more affordable than most other small-ticket leasing programs. Lease terms up to 66 months are available for businesses with more established credit histories. Financial terms of the new leases are also generous, with down payments consisting of first and last month payments only. This, in addition to very aggressive lease rates, now makes owning an ATM an option for many businesses previously thought to be unattainable. "We believe that demand for ATMs in the United States will continue to rise as long as Triton and our partners continue to make affordable financing available to independent business owners," said Dr. Ernest Burdette, Triton President and CEO. "With more than $105 million in ATM leases already outstanding in the U.S., Popular Leasing has demonstrated that it knows and understands the needs of the small-ticket leasing customer. The fact that Popular's ATM portfolio has outperformed some of its other leasing portfolios was an important consideration for Triton as we sought a leasing partner who will be committed to a long-term business relationship." Available only through authorized Triton distributors, the Popular Leasing program will be especially beneficial to early-stage businesses and new business owners, who frequently have difficulty in obtaining equipment financing because of limited credit histories or minor credit blemishes. The new program is being offered only to customers in the United States. For Canadian customers, Triton provides ATM lease financing through a recently announced agreement with CitiCapital, the leasing arm of Citigroup. The company is currently exploring similar arrangements for locations outside North America. About Popular Leasing U.S.A. Popular Leasing U.S.A. is part of Popular, Inc., a publicly owned diversified financial services company. Popular Inc. is ranked among the 40 largest bank holding companies in the United States. With assets in excess of $27 billion, Popular, Inc., offers the substantial financial support to Popular Leasing. In addition to leasing, through its parent company, Banco Popular North America, Popular Leasing offers small-business financing, franchise loans, as well as a complete array of card products including personal, business, and corporate credit card services with the quality, service, and simplicity of a leasing company. Popular Leasing provides solutions and delivers the highest quality financial products and services. About Triton Systems, Inc. As the leading provider of cash-dispensing ATMs for off-premise locations, Triton is committed to redefining and leading the retail market for cash delivery systems. Triton is the largest provider of off-premise ATMs and ATM management software in North America and has more than 55,000 installations in over 15 countries worldwide. Triton is headquartered in Long Beach, MS and is an operating company of Dover Industries, Inc., a subsidiary of Dover Corporation. For more information about Triton, please visit www.tritonatm.com or call 1-228-868-1317 (U.S. toll free 800-367-7191). #### ####################### ################# --------------------------------------------------------------------------------------------- In case you live on a different planet, and have not heard: Hewlett-Packard has made an offer to buy Compaq for $25 billion High-tech giant Hewlett-Packard Co. is buying Compaq Computer Corp. for about $25 billion in a blockbuster merger bringing together two rivals struggling to survive amid the batted computer industry. The stock swap creates a behemoth with 130,000 employees and $87 billion in revenue. Cuts of employees to follow. Opportunities for many. It is not true the name of the company will change to CHP, or Hewlett-Paq or the Packard Car Company
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Executive Director at United Association of Equipment Leasing drives----- 1993 Toyota Corolla (paid for!) it's a total Mom car..... However, I've promised myself an old Alfa Spider when I'm 40....and I'll be there in a few months......... Joanie Dalton _________________________________________________________________ FT.Com EU to launch probe into $25bn HP-Compaq deal By Louise Kehoe in San Francisco and Michael Mann in Brussels The European Commission is set to investigate Hewlett-Packard's proposed $25bn takeover of Compaq Computer, a deal that could radically change the competitive landscape in the information technology sector. The deal, which has been approved by the boards of both companies, would create an IT behemoth with annual revenues of about $87bn and pro forma assets of more than $56bn. In a press conference early on Tuesday, Carly Fiorina, HP's chairman and chief executive, said the companies plan to be "very cooperative" with antitrust authorities in anticipation of regulatory review. The EU on Tuesday declined to comment on whether it had been approached by the companies. But it said it would need to approve any merger where the combined sales were worth more than E5bn ($4.5bn) and where each company had EU sales greater than E250m. The Commission's powers apply even to mergers between two US companies, and earlier this year it blocked General Electric's proposed takeover of Honeywell. The combined company, which will retain the Hewlett-Packard name, has the potential to become a serious challenger to International Business Machines, the world’s biggest computer company, which had revenues of slightly more than $88bn last year. The combination also raises new competitive challenges for Sun Microsystems, in the computer server sector, and Dell Computer in the personal computer market. However, the complexities of the integration of two of the world’s largest computer companies might also create a hiatus that could benefit competitors. Under the terms of the agreement, which was announced on Monday night, Compaq shareholders will receive 0.6325 of newly issued HP shares for each Compaq share. HP shareholders will own approximately 64 per cent of the combined companies. Ms Fiorina will remain chairman and chief executive. Michael Capellas, currently chairman and chief executive of Compaq, will become president of HP. Mr Capellas and four other members of Compaq’s current board of directors will join HP’s board. "This is a decisive move that accelerates our strategy and positions us to win," said Ms Fiorina. HP and Compaq had complementary product families, she said, and when combined could realise "significant cost structure improvements and access to new growth opportunities." "At a particularly challenging time for the IT industry, this combination vaults us into a leadership role." Merrill Lynch on Tuesday said the deal would probably spark more consolidation in the hardware market and added it made strategic sense for the two companies. However, it said the merger would not be negative for IBM and it should be able to gain share as HP faced a "herculean integration task". The deal looked good on paper, but would face major challenges, according to Andrew Neff of Bear Sterns. "Our concern is that Hewlett-Packard really does not have any history with a merger of this magnitude and Compaq's acquisition of Digital had difficult integration issues," he said. Ms Fiorina acknowledged that the combination would be challenging. "We have done comprehensive integration planning," she said. "We are committed to achieving the synergies we have identified while maintaining our competitive position and momentum in the marketplace." HP said the acquisition would enhance pro-forma earnings in the first full year of combined operations, based on achieving planned cost savings of about $2bn in fiscal 2003 and $2.5bn by mid-2004. Cost saving measures are expected to include the loss of at least 14,000 jobs. HP and Compaq have extensive international operations in more than 160 countries. The total workforce of the two companies is currently more than 145,000. The companies said the primary elements of their operations would include a $20bn printing and imaging business, based largely on HP’s current operations; a $29bn personal computer business, created by combining HP’s consumer-oriented PC operations and Compaq’s corporate PC businesses; a $23bn enterprise computing business based on a combination of HP and Compaq server, software and storage businesses; and a $15bn services business based largely on Compaq’s IT services operations. The $25bn acquisition is the largest to date in the computer industry. Goldman Sachs advised HP on the deal, while Compaq was represented by Salomon Smith Barney. ___________________________________________________________________ Manufacturing activity drops for 13th straight month, but signs of turnaround seen NEW YORK – Manufacturing activity declined for the 13th consecutive month in August, but at a significantly slower rate, raising hopes an economic turnaround is near. The Tempe, Ariz.-based National Association of Purchasing Management announced that its index of business activity rose to 47.9 from 43.6 in July, much better than the 44.0 analysts had been expecting. An index above 50 signifies growth in manufacturing, while a figure below 50 shows contraction.------------------------------------------------------------------------------------ ### ################### ################# CCG Program Offers Economic Relief for Small Business; Leasing Option Allows Cash-Lean Businesses to Purchase Needed Software and Services Ahead of Q1 Price Increases
ATLANTA)-- --With this year's downturn in the economy small and medium businesses looking to purchase technology products and services are faced with two problems. First is the fact that many, if not most, companies have had to severely trim or eliminate budgets. On top of strict budgets is the fact that many technology providers who themselves are struggling look to raise prices in Q4 of 2001 or Q1 of 2002 in an effort to bolster revenues. The result is that small and medium businesses who need to make technology purchases now are fiscally unable to do so. Even worse, is when they are ready to purchase in the next two to three quarters, they will be paying more for the same products and services. CCG, a premiere software and services provider, has created a solution by introducing its own financing program: BuyTime. Through this program small and medium businesses can easily qualify for and receive as much as 100% financing over 60 months on any products and/or services purchased through CCG. "What this program does is allow small and medium business owners to make intelligent buying decisions," said Mark R. Munson, CCG's president and founder. "Major software companies are using the threat of 30 to 60% price increases after January 1 to push businesses to make large purchases at a time when most budgets are either depleted, frozen or a mere fraction of their original number. Small and medium business can't afford to pay higher prices later but they don't have the cash to purchase at lower prices now. BuyTime solves that dilemma." BuyTime initially covers sales of Rapport, CCG's sales force automation tool, IBM and Lotus software products, and all maintenance, support, installation and customization services necessary. Additional products and services may be added based on market demand.
( Courtesy of ELAonline.com ) #### ####################### ###################### Oracle's Larry Ellison pulls in $706 million on stock options By Michael Liedtke ASSOCIATED PRESS SAN FRANCISCO – Oracle Corp. chief executive Larry Ellison reaped a $706 million windfall by cashing in 23 million stock options while his company's recently swooning shares were still flying high, according to documents filed with securities regulators. Ellison, one of the world's richest men despite $45 billion in paper losses during the past year, previously had acknowledged that he realized a huge gain in an earlier filing with the Securities and Exchange Commission. The exact amount, however, wasn't divulged until Oracle released its shareholder proxy statement late last week. Ellison realized an average gain of $30.64 on the more than 23 million stock options he redeemed during the fiscal year that ended May 31, according to the filing. In trading Tuesday on the Nasdaq Stock Market, Oracle's shares were up 46 cents to $12.67. The stock reached its split-adjusted high of $46.32 last summer. Ellison sold most of the options in January, a few weeks before Oracle's stock sank amid slowing sales and weakening profit growth. Until a March warning about the slump, Redwood Shores-based Oracle had forecast it would avoid the financial malaise affecting high-tech companies. A series of class-action and derivative shareholder suits assert that Oracle broke securities laws by making misleading statements about its prospects while Ellison and other company insiders sold their shares. Jeff Henley, Oracle's chief financial officer, made $85.6 million executive vice president Jay Nussbaum made $22.2 million after exercising their options. Oracle has denied the allegations made in the shareholder complaints, filed in federal and state courts in California and Delaware. Ellison, 57, didn't receive a paycheck from Oracle last year. In 2000, Ellison agreed to give up his salary and bonus for three years ending in May 2003 in exchange for 40 million stock options. #### ###################### ###################### ########### Comdisco Receives Court Approval of Bidding Procedures for Sale of Leasing Businesses
ROSEMONT, Ill Court Also Approves Management Incentive Programs; Approvals Facilitate Company's Ongoing "Fast-Track" Reorganization Process Comdisco, Inc. (NYSE: CDO) announced today that on August 30, 2001, the U.S. Bankruptcy Court for the Northern District of Illinois approved bidding procedures for the potential sale of the company's leasing businesses, excluding its European leasing operations. As part of the approval, the court accepted a proposed bid deadline of September 30, 2001, an auction date of October 10, 2001, and a sale hearing date of October 23, 2001. The court also approved a management incentive program for 43 senior managers of the company and the employment contract of Comdisco's Chairman and Chief Executive Officer, Norm Blake. These actions follow the prior approvals of employee retention and incentive programs for all Comdisco employees on August 9, 2001. Norm Blake, Chairman and Chief Executive Officer, said: "We are pleased that Comdisco continues to proceed through the reorganization process in an efficient and effective manner. Approval of the bidding procedures for the potential sale of our leasing operations is a major step in support of our evaluation of our strategic alternatives for maximizing the value of our leasing business for our stakeholders. The approval of the incentive program for 43 of our managers is important to ensure consistent leadership for our businesses. This approval, as with the approval of retention and incentive programs for all employees on August 9, recognizes the commitment and contributions employees are making to serve our customers and run the business as we move through the reorganization process." A potential sale of Comdisco's leasing businesses would have to meet the same criteria that was set forth in the proposed sale of the company's Availability Solutions (technology services) business to Hewlett-Packard Company (HP) announced July 16, 2001. The requirements include that a buyer have expertise and experience in the industry, a global presence, a reputation for outstanding customer service, a culture that values people and the development of employees, and the resources to grow the business that is purchased. On July 16, 2001, Comdisco, Inc. and 50 domestic U.S. subsidiaries filed voluntary petitions for relief under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Northern District of Illinois. The filing allows the company to provide for an orderly sale of some of its businesses, while resolving short-term liquidity issues and enabling the company to reorganize on a sound financial basis to support its continuing businesses. Simultaneous with the filing, Comdisco also announced the proposed sale of sell substantially all of its Availability Solutions business to HP for $610 million. This transaction is still subject to higher or otherwise better offers in a court-approved bidding process. The court approved bidding procedures for this sale on August 9. Comdisco's operations located outside of the United States were not included in the chapter 11 reorganization cases. All of Comdisco's businesses, including those that filed for chapter 11, are conducting normal operations. Comdisco is continuing to pursue other strategic alternatives to create value for its stakeholders, including the potential sale of its leasing businesses, as provided for under today's court-approved bidding procedures, as well as the restructuring of its Ventures group. The company intends to reorganize on a "fast-track" basis and has targeted emergence from chapter 11 during early 2002. About Comdisco Comdisco (www.comdisco.com) provides technology services worldwide to help its customers maximize technology functionality, predictability and availability, while freeing them from the complexity of managing their technology. The Rosemont, (IL) company offers a complete suite of information technology services including business continuity, managed web hosting, storage and IT Control and Predictability Solutions SM. Comdisco offers leasing to key vertical industries, including semiconductor manufacturing and electronic assembly, healthcare, telecommunications, pharmaceutical, biotechnology and manufacturing. Through its Ventures division, Comdisco provides equipment leasing and other financing and services to venture capital backed companies. ### ############ #################### ##################### Four Senior Corporate Attorneys Join Sidley Austin Brown & Wood's New York Office NEW YORK-- A group of senior corporate attorneys has joined Sidley Austin Brown & Wood as corporate partners in the firm's New York office. The attorneys are Christopher Hilbert, John J. Bonacum III, Rory Kelleher and Andrew W. Nelson. All were previously partners in the Business and Finance Section at Morgan, Lewis & Bockius LLP. "This is a very seasoned group of transactional attorneys who have represented some of the best corporate clients in North America and Europe - it's a delight to welcome them to our firm," said Thomas Smith, Vice Chair of the Management Committee at Sidley Austin Brown & Wood. Mr. Smith said the four attorneys, who have been together for the better part of two decades, "cover the waterfront of corporate transactional work, with particular emphasis on corporate finance transactions, mergers and acquisitions and private equity investments." He noted that the group has served for many years as chief outside U.S. counsel for several large international corporations (including Canadian corporations such as Bombardier Inc.), which they have advised on a broad portfolio of U.S. transactions and financings. "We see a great opportunity to expand our work at Sidley Austin Brown & Wood," said Mr. Hilbert. "The merger that formed the firm this past spring created an especially strong and strategic platform for the kind of large corporate work we handle, domestically as well as internationally, particularly since so many major transactions these days have a global component." He added that "given our long-standing relationships with large corporate clients, we were also attracted to Sidley Austin Brown & Wood by the combined firm's long and deep relationships with many premier corporate and financial institution clients." Partner Backgrounds - Christopher Hilbert - Mr. Hilbert, 50, has represented both U.S. and non-U.S. corporations in a long list of transactions. As U.S. corporate counsel to several large Canadian corporations, he has had a hand in ongoing acquisition, joint venture and financing and investment activities in the U.S. Mr. Hilbert has also advised numerous institutional investors, lenders and private equity funds in various acquisitions and related financings. Mr. Hilbert is a 1976 graduate of Harvard Law School. He graduated from Amherst College in 1973 with a degree in economics. - John Bonacum - In addition to his mergers and acquisitions work, Mr. Bonacum, 48, is experienced in capital markets transactions, including secured and unsecured financings, as well as syndicated bank loans, structured finance, private placements and off-balance sheet transactions. He has served both as lender's counsel for financial institutions and as borrower's counsel for several major U.S. and international corporations. Mr. Bonacum received his JD from Boston University in 1982 and his undergraduate degree from Brown University in 1975. - Rory Kelleher - Mr. Kelleher, 52, has practiced primarily as a finance lawyer, principally in leasing and structured finance. He has worked on many equipment financing matters, including the leasing of aircraft, ships and rail cars, including financing transactions in connection with the expansion of Amtrak's Northeast Corridor high-speed rail line. He has also worked on multiple public and private debt and equity offerings. Mr. Kelleher earned his JD from Columbia University in 1972. He graduated from Fordham University in 1969. - Andrew Nelson - Mr. Nelson, 41, has experience in mergers and acquisitions, private equity and capital markets. In acquisitions and joint ventures, he has had ongoing representation of several large international corporations, including companies in shipping, transportation and construction. Mr. Nelson has also advised corporate and institutional investors in structuring portfolio company investments. He has also worked on bank financings, debt offerings, commercial paper and other financings, including hybrid debt/equity trust securities as well as cross-border offerings. Mr. Nelson graduated in 1986 from Fordham University School of Law and from Hobart College in 1982. Sidley Austin Brown & Wood is one of the world's largest full-service law firms, with more than 1,300 lawyers practicing on three continents (North America, Europe and Asia). The firm's U.S. offices are in Chicago, New York, Washington, Los Angeles, San Francisco, Seattle and Dallas. Its international offices are in London, Hong Kong, Singapore, Tokyo, Beijing and Shanghai. ( courtesy of ELAonline.com ) ## ############################ ###############################
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