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2006 ARCHIVES- Volume 1
December 2006: Volume 1, Number 25
Report: A Former CIT Sales Manager O’Neill Gets Prison for
Role in
Financing Fraud
As seen in the Monitor Daily
A former district sales
manager of CIT Group was sentenced in U.S. District Court in Boston on November 21 -- along with five
co-conspirators -- for his role in a multi-million dollar fraudulent
equipment loan scheme.
Michael O’Neill, formerly a district sales manager for CIT Equipment Finance
based out of his home in Pennsylvania,
was sentenced to one year and nine months in prison.
In June, O'Neill pleaded guilty to conspiracy, two counts of wire fraud and
one count of mail fraud before Chief U.S. District Judge Mark L. Wolf for his
part in a complex financing scheme involving more than $20 million in
fraudulent equipment loans from 11 different lenders.
According to the 78-page indictment O’Neill received “kickbacks” for aiding a
group of co-defendants – led by businessman Peter Maggio – in obtaining
construction equipment financing from his employer, CIT Group. Maggio was
sentenced to eight years and two months in prison for his part in the scheme.
Other lenders that were victims of the scheme included GE Capital, Textron
Financial, Newcourt Credit, New Holland Credit, ORIX Credit Alliance,
Associates Commercial Corp., Volvo Commercial Finance, Green Tree Financial
Services, U.S. Bancorp Leasing & Financial, and Caterpillar Financial
Services.
Beginning in 1998 Maggio, along with William Howe -- an accountant -- and
Jeffrey Deveau -- a commercial loan broker and owner of heavy equipment
dealer Deveau Tractor, Inc. – conspired with O’Neill and three other men to
obtain loans using “straw” borrowers and false financial documents.
O’Neill agreed to accept payment of roughly $133,000 from Deveau and Maggio
to help them get straw loans approved by CIT Group, and to conceal the
fraudulent nature of the loans, the indictment charges. In a sentencing
document, O’Neill’s attorneys claim that number was closer to $60,000.
As a result of the scheme, commercial lenders approved and funded loans
totaling $21.6 million, and collectively suffered net losses in excess of
$13.3 million, according to court documents.
In addition to the straw financings, the defendants also created fictitious
“add-on” loans for the purported installation of specialized equipment on
tractor trucks, and obtained multiple financings of trucks and construction
equipment.
In addition to jail time, O’Neill was also ordered to pay $1.8 million in
restitution to CIT Group for his participation in the frauds.
December 2006: Volume 1, Number 24
Report: AerCap Prices IPO at $23 Per Share
As seen in the Monitor Daily
AerCap Holdings, a lessor
of aircraft and engines, announced the pricing of the initial public offering
of its ordinary shares at $23.00 per share.
The securities offered include 6,800,000 shares to be issued and sold by
AerCap as well as 19,300,000 shares to be sold by shareholders of AerCap.
The selling shareholders have granted to the underwriters an overallotment
option to purchase up to 3,915,000 additional ordinary shares.
The ordinary shares are expected to trade beginning on November 21, 2006 on
the New York Stock Exchange under the symbol "AER."
AerCap intends to use the net proceeds it receives from the offering to repay
a portion of its outstanding senior secured and junior subordinated term
loans incurred in connection with its acquisition of AeroTurbine in April
2006.
AerCap owns and manages a fleet of over 200 aircraft, owns 61 engines and has
one of the largest new aircraft order books among operating lessors.
Morgan Stanley, Goldman, Sachs & Co., Lehman Brothers Inc. and Merrill
Lynch are bookrunners for the offering. The offering of ordinary shares will
be made only by means of a prospectus.
December 2006: Volume 1, Number 23
Report: NAELB Announces Broker Ethics Exam, Certification
As seen in the Monitor Daily
The
National Association of Equipment Leasing Brokers (NAELB) has launched a new
"Best Practices Broker" ethics examination aimed at codifying a set
of principles for leasing brokers.
The examination will be given once a year, at the NAELB annual conference,
and is designed to test only ethics.
The exam will consist of two parts, the first being multiple choice and the
second being essays. The multiple choice section will focus on the NAELB Code
of Ethics and the second part will consist of essays where the test taker
will be presented with ethical conflicts and be asked to discuss the proper
ethical resolution of those conflicts.
The successful candidate will achieve a score of at least 90% on the
multiple-choice part of the test and 80% on the essay portion of the test.
The test may be passed in parts.
The passing candidate will be entitled to use the designation "Best
Practices Broker" on their company business cards, letterhead,
stationary, marketing materials, and the like.
The designation may be used in any manner seen appropriate, including
informing the broker's customers, vendors, and funders, of the designation.
The exam and subsequent designation is only open to NAELB Broker members.
Those wishing to sit for the Best Practices exam must be approved by the
NAELB to be of good ethical character.
December 2006: Volume 1, Number 22
Report: More Small Businesses Turning to Alternative Financing
As seen in the Monitor Daily
On A new
report published by the Federal Reserve finds that increasing numbers of
small businesses turned to non-bank financial institutions for capital and
credit lines between 1998 and 2003.
The 29-page report, titled: "Financial Services Used by Small Businesses:
Evidence from the 2003 Survey of Small Business Finances" was based on a
survey of more than 4,000 firms.
A large majority of firms surveyed were very small, owner-managed
establishments. More than 80% had fewer than 10 workers, and less than 3% had
50 or more. The survey defines small businesses as those with fewer than 500
employees.
The Fed found that more businesses are seeking capital from non-bank
institutions such as finance and leasing companies, brokerages, credit- and
debit-card processors, venture capitalists, and family and individuals.
According to the report, more than half of respondents reported using
nondepository sources in 2003, compared with about 40% in 1998. In 1987 only
25% of small firms used financing that wasn't provided by banks, thrifts or
other depository institutions.
The report found that leasing companies were especially popular at the larger
end of the small business spectrum.
"In this changing financial marketplace, small businesses have been
diversifying their providers of financial services. Among these sources,
finance companies and leasing companies were important suppliers of credit
and financial management services, especially for the largest small
businesses, and brokerage firms were important suppliers of brokerage and
trust and pension services," the report stated.
But the survey found that banks still account for the majority of credit
lines, loans and lease financing; the only credit type for which banks
weren't an important source was capital leasing, the Fed said.
According to the report: "Although suppliers other than commercial banks
were important sources of lines, loans, and leases, commercial banks in 2003
were about two times more likely than finance companies to have been the
source of these services for small businesses, six times more likely than
family and individuals, and ten times more likely than leasing
companies."
Click here
to access the Fed report "Financial Services Used by Small
Businesses" in its entirety.
November 2006: Volume 1, Number 21
A Simple Step to Help Your Realtors Build Their Business
By: Bliss
Sawyer
One of the best ways to
improve your reputation with Realtors is to add value "behind the
scenes." Basically, this means that you go above and beyond getting the
loan done. You find ways to help their business or make their job easier.
It's even better if you give this type of value in ways that are not expected.
One technique you can
implement is to collect testimonials from your clients for the Realtor. Hopefully, you are
already asking for a recommendation as you close yet another successful loan.
It really takes no more effort to ask for a sentence or two for the Realtor
on the transaction. The best time to ask is immediately after (within one or
two days) closing.
Asking can be done in a
variety of ways. Depending on your clients and how they like to communicate,
you can telephone, e-mail or send a letter (with a place to fill in the blank
along with a return envelope.) You can word it similar to this: I have appreciated the opportunity to work with you
on your recent mortgage. Since my business is based primarily on
referrals, I am hoping you can take a few minutes to write a short
testimonial of my work. This helps others to understand my professional
dedication to the mortgage business. I would also like to pass along a
testimonial of the work provided by (Realtor's Name). I highly value my
relationship with this Real Estate Professional and know they would
appreciate your recommendation as well.
Once you have the
testimonials, write a letter to your Realtor's Broker explaining how much you
and the clients enjoyed working with their agent and that you wanted to pass along
the great feedback you received. Send a copy of the letter and testimonials
to the Realtor as well. This is best done with a real letter rather than
e-mail as they now have a hard copy for their records. You also have the
opportunity to include your card or personal brochure.
I also recommend you take
the time to thank your client for their referral. A personal note is a great
way to let them know the value their testimonial gave to your business.
Remember, when you
talk about yourself it's considered boasting, when others talk about you it's
considered a compliment.
Bliss Sawyer
www.mortgagemarketingstrategies.com
www.blisssawyer.typepad.com
806-577-3937
November 2006: Volume 1, Number 20
Dalmia, Co-Conspirators Indicated for Roles in Allserve Fraud
As seen in the
Monitor Daily
Dinesh
Dalmia, founder of Allserve Systems and the architect of a computer financing
scam that bilked millionse of dollars out of more than a dozen leasing
companies, was indicted by a federal grand jury along with two
co-conspirators for his role in the fraud.
The 16-count indictment charges Dalmia and Ashish Paul, with conspiracy, wire
fraud and money laundering between January 2004 and last December. A third
man, William Dowling, was also charged with conspiring to launder money.
The indictment was unsealed on September 29 upon the arrest of Paul at his New Jersey home by
special agents of the FBI. Dalmia, who was already the subject of a criminal
complaint filed in federal court in March, is currently a fugitive
incarcerated in India
on stock fraud charges. In March, the government filed two charges of wire
fraud against Dalmia stemming from two separate lease-financing transactions
-- totaling just under $14 million -- between Allserve and a New York-based
hedge fund, D. B. Zwirn Special Opportunities Fund.
Dowling turned himself in to the FBI in Ohio
and will eventually be arraigned in U.S. District Court in New Jersey.
Specifically, the 31-page indictment details a conspiracy to defraud lenders
GE Capital Finance, CitiCapital Technology Finance and Fifth Third Leasing.
The government alleges Dalmia used a series of shell companies, forged
invoices and phony financial statements to secure multi-million dollar
financing through lease contracts for computer and telecommunications
equipment for call centers purported to be engaged in debt collection and
telemarketing. To fool inspectors, agents charge that Dalmia purchased used
and outdated telecom, computer and electronic equipment at a total cost of
less than $800,000. By the time lenders began asking questions, Allserve owed
$82.7 million to various creditors on total assets of just under $36 million.
The company filed for bankruptcy in Nov. 2005.
According to the indictment, after the lenders paid more than $19 million for
the high-end equipment to an Ohio
company controlled by Paul, the Paul company then subcontracted its
obligation to provide equipment to yet another company controlled by Dalmia.
Thereafter, Dalmia and Paul submitted fraudulent invoices to the
Paul-controlled company, which then routed the money back to Dalmia.
The money laundering charges stem principally from the movement of funds through
shell companies by Dalmia, Paul and Dowling.
Paul allegedly used the laundered funds to pay personal credit card expenses,
country club bills, private tuition payments, and the purchase of a $1.9
million home in Norwood.
The indictment provides notice that the government is seeking forfeiture of
Paul's residence, as well as more than $15 million from Dalmia, Paul, and
Dowling, each of whom would be jointly and severally liable for the judgment
amount.
October 2006: Volume 1, Number 19
How Many People Do You Know
- by Bliss Sawyer
I recently told my
desperately poor 16 year old son, the more jobs he applied for and called
back on, the sooner he would find one. I also once heard the production
manager of a large mortgage company tell his people that being a loan officer
is like being unemployed every day out looking for a job.
Your occupation as a loan
officer is a numbers game. How many people do you know? That
isn't a rhetorical question. I want you to write it down. Today's
marketing tip is an action exercise. Go ahead and write down the
approximate number of people you think are in your sphere of influence. This
would include everyone from past clients to other business relationships to
family and friends to neighbors to the plumber and your
hairdresser.
Next take a look at how
many you actually have in a database. How many of these people receive
something from you at least once a month? Twelve times a year everyone
you know should receive something in the mail so they have your contact
information and any other updated information about mortgages, you and your
company.
Now, block out time this
week to update your database with the names of everyone you currently know
and then schedule some type of marketing piece to go out by the end of next
week. It's not difficult. A postcard will do. Wish them a
happy summer. Anything - especially if you haven't been doing
anything. If you already have a system in place, great! Use your
blocked-out time to fine tune your list.
Your next goal will be to
continually add to this database. You should be increasing your center
of influence each week by 10 names. Yes, that means you will need to be
networking and meeting new people. Remember, you are in sales.
This is what you do. Once you have mastered 10 a week, step it up to 15
a week. The more people that know you and what you do for a living, the
more people will start asking you for advise. The loans will just
naturally follow.
Don't know how to meet 10
new people each week? Be creative. Join a networking group,
Realtor committee, Chamber of Commerce etc. I am currently involved in
a biking club, community gardeners club, along with various businesses and my
children's school activities. I don't currently originate loans, yet
people still ask me for help and assistance - even though I explain that I am
a mortgage trainer and speaker, not an originator. Just get involved
and be good at what you do, it truly is that simple!
In case you were
wondering, my 16 year old had a job about two weeks after he started taking
me serious and turning in applications and calling back managers. It
works for teenagers and it will work for you to find potential
borrowers. Just be grateful you aren't bussing tables!
Note to
Managers: I
strongly recommend you make this exercise a part of your next sales meeting -
see where you team measures up with their data base and mailings.
www.MortgageMarketingStrategies.com
October 2006: Volume 1, Number 18
Servicing the Listing Agent
- by Bliss Sawyer
It is amazing to me that many loan
officers do not make calls to the listing agent unless the transaction
absolutely requires it to move ahead. Even if the listing agent is
already tied in with a lender, you never know what might happen in the
future. Let me tell you a brief story…
At one point in my
origination career, I moved to a new area just when rates were
climbing. I tried the following approach with a selling agent on one of
my transactions. The agent was a high-producing Realtor and at the end
of the transaction, I asked if we could meet for lunch to discuss doing
additional business together. He said he was grateful for the great
service I had provided, but was loyal to a lender that had been with him for
many years. I finished the conversation by letting him know I would
love to work with him anytime in the future should this situation
change.
I then contacted him by
fax and phone consistently over the next six months hoping to work with him
again. One day, he called and explained that his current lender was not
performing well and asked if I would like to be his preferred lender.
This was the start of a fantastic referral relationship. To set
yourself apart, you can utilize a few new tactics when you have the
opportunity to work with a listing agent that does not currently give you
referrals.
Phone calls - You aren’t releasing any
personal information, just letting them know you are on top of things.
At the start of the transaction, let them know you have the file and that
everything looks great for the contract closing date. Give a courtesy
call when the inspection and/or survey is done as well as the
appraisal. Many Realtors have had deals go past the closing date simply
because these items were not completed on time.
Faxes and e-mail - utilize this great technology
to brand you as the lender that gets the job done. At set up, send a
fax or e-mail with all of your contact information along with your
processors. It is also a great idea to send over the approval on
buyers. Even if they received this at the time the offer was presented,
they most likely did not receive it directly from you. This gives you
the opportunity to recognize their part in the transaction and express your
willingness to help.
Closing gives you another occasion to sell
yourself. Take a minute to stop by the seller's closing to meet
everyone and thank them for a great transaction. Let the agent and
seller know you would love to work with them again. This is especially
powerful if the seller’s lender does not attend the closing on their new
transaction.
After closing invite the agent to lunch to
discuss helping his business grow. I would also suggest you consider
adding the agent to your Realtor Contact List. You have hopefully made
a great impression and may have an easy time convincing them to refer more
business your way. It may take six months, but could definitely be
worth it.
Take the time on your
next transaction to service the listing agent and develop another referral
source. Your pipeline will grow!
www.MortgageMarketingStrategies.com
October 2006: Volume 1, Number 17
Closing Satisfaction Guarantee
- by Bliss Sawyer
Many Realtors have had a
bad experience with a closing being delayed because of mistakes on the
paperwork discovered at the closing table. This marketing piece
explains to Realtors that you want to earn their business and will do
everything you can to make each transaction as smooth as possible.
This guarantee states
your commitment to be at each closing to assist and answer questions.
In the unlikely event you are not available, explain that you will have a
“dress rehearsal” with the borrowers prior to their closing
appointment. Tres Miller with AllStar Mortgage in St. George, UT
has used this concept of a dress rehearsal to successfully close high volumes
of loans and create “raving fans” without actually being at the
closing. Your dress rehearsal should cover the following points:
1.
Interest rate
2. Payment
3. First payment due date
4. How much to closing
5. Terms
6. How names read for signatures
7. Vesting
The above items are where the majority of problems and delays occur in most
closings. If you have addressed these seven points, there will be no
surprises at your closings and you can guarantee yourself satisfied clients.
Market this guarantee to
Realtors by explaining that their satisfaction and the satisfaction of each
borrower is your highest priority. Modify the guarantee for borrowers
or into a brochure and use this as a marketing tool during initial contacts
with potential clients.
Marketing strategies
don’t have to be expensive, they just have to work. Spend the time
today to create a guarantee that accurately reflects your commitment to
borrowers and Realtors. You will have one more tool to set
yourself apart from the competition and guarantee yourself increased
production.
www.MortgageMarketingStrategies.com
October 2006: Volume 1, Number 16
How Many People Do You Know
- by Bliss Sawyer
How Many People Do You
Know -
by Bliss Sawyer
I recently told my
desperately poor 16 year old son, the more jobs he applied for and called
back on, the sooner he would find one. I also once heard the production
manager of a large mortgage company tell his people that being a loan officer
is like being unemployed every day out looking for a job.
Your occupation as a loan
officer is a numbers game. How many people do you know? That
isn't a rhetorical question. I want you to write it down. Today's
marketing tip is an action exercise. Go ahead and write down the
approximate number of people you think are in your sphere of influence. This
would include everyone from past clients to other business relationships to
family and friends to neighbors to the plumber and your
hairdresser.
Next take a look at how
many you actually have in a database. How many of these people receive
something from you at least once a month? Twelve times a year everyone
you know should receive something in the mail so they have your contact
information and any other updated information about mortgages, you and your
company.
Now, block out time this
week to update your database with the names of everyone you currently know
and then schedule some type of marketing piece to go out by the end of next
week. It's not difficult. A postcard will do. Wish them a
happy summer. Anything - especially if you haven't been doing
anything. If you already have a system in place, great! Use your
blocked-out time to fine tune your list.
Your next goal will be to
continually add to this database. You should be increasing your center
of influence each week by 10 names. Yes, that means you will need to be
networking and meeting new people. Remember, you are in sales.
This is what you do. Once you have mastered 10 a week, step it up to 15
a week. The more people that know you and what you do for a living, the
more people will start asking you for advice. The loans will just
naturally follow.
Don't know how to meet 10
new people each week? Be creative. Join a networking group,
Realtor committee, Chamber of Commerce etc. I am currently involved in
a biking club, community gardeners club, along with various businesses and my
children's school activities. I don't currently originate loans, yet
people still ask me for help and assistance - even though I explain that I am
a mortgage trainer and speaker, not an originator. Just get involved
and be good at what you do, it truly is that simple!
In case you were
wondering, my 16 year old had a job about two weeks after he started taking
me serious and turning in applications and calling back managers. It
works for teenagers and it will work for you to find potential
borrowers. Just be grateful you aren't bussing tables!
Note to Managers: I
strongly recommend you make this exercise a part of your next sales meeting -
see where you team measures up with their data base and mailings.
www.MortgageMarketingStrategies.com
October 2006: Volume 1, Number 15
Gas Giveaway - by Bliss Sawyer
Gas prices have finally
come down, but this is still a hot topic for consumers. We’ve all felt
the squeeze of higher gas eating away at more of our income in the last
year. Why not use this as a marketing tool?
Rick Hamm, Unifirst
Mortgage, Grand Junction,
Colo., has come up with a great
way to recognize his customers by inviting them to save on gas and eat
free. This is a creative customer appreciation event that also creates
excitement and name recognition in their community.
Unifirst sent a postcard
out to their entire database inviting them to save 20 cents
per gallon on a fill up at one of a few specified gas stations on a Saturday
from
10:00-4:00 (limit 25 gallons.) Things were crowded, but staff helped
direct traffic
and talk to all the patrons.
When they finished
filling up, receipts were presented at a hospitality area, where past clients
received a cash rebate along with a free hotdog and drink (the gas stations
were happy to provide soft drinks since they more than doubled their average
gas sales that day!) Unifirst had banners and signs announcing
what was going on as
well as having their name on the BBQ grills.
This was a wonderful
opportunity for loan officers to get reacquainted with past
customers. A great side benefit was the chance to meet potential
borrowers by offering hotdogs to other gas customers that were not Unifirst
clients. The average gas purchase per customer was 16 gallons, for a
cost of about $3.20 and inexpensive hotdogs from Sam’s Club.
Business and management
guru Tom Peters states it perfectly….Be
distinct or you'll be extinct. In every aspect of
your business you must try to set yourself apart from the competition.
This includes improving old ideas and trying new ideas. So why not try
something that has already been proven to be successful?
*www.MortgageMarketingStrategies.com*
September 2006: Volume 1, Number 14
OECD: U.S. Economy to Pick up In
Second Half of 2006
The
Organization for Economic Cooperation and Development (OECD) has released its
interim report on global economic conditions.
In its outlook for the second half of 2006, the OECD said it expects to see a
gradual rebalancing of economic growth between the U.S.
and Europe.
According to the OECD, data for the first half of 2006 showed much stronger
than-expected performance in Europe and a significantly weaker one in the United States and Japan,
but the group said the situation is likely to change the second half, with
the U.S.
gaining momentum.
"The U.S.
economy is running at around full capacity," the report reads. "In
the second quarter, investment weakened, dragged down by the homebuilding
sector. Household consumption slowed less and has in fact tended to
accelerate in recent months, consistent with a pick-up in compensation, and
so have exports, pointing to robust GDP growth in the third quarter."
The group noted that despite the Federal Reserve's recent decision to halt
short-term interest rate hikes, "further tightening may turn out to be
warranted" if economic activity does not continue to slow in the coming
months.
But the group added: "There is a strong case for waiting before further
hiking the policy rate until the new series of core inflation ...is in firmly
positive territory."
September 2006: Volume 1, Number 13
ELA: Leasing Volume Down in July; Portfolio Quality Remains
Strong
Tuesday, September
05, 2006
The Equipment Leasing
Association released its Monthly Leasing Index (MLI-25) of equipment leasing
and finance activity for July.
The new data shows portfolio quality strengthened with charge-offs as a
percentage of net lease receivables at their lowest levels of the year.
Charge-offs for July are .33%, down from .59% in the prior month.
The MLI-25 is a monthly survey of commercial equipment lease and loan
activity and performance as reported by 25 ELA member equipment finance
companies.
Overall volume for the period declined when compared to June originations,
which spiked to their highest levels of the year. July business activity
totaled $5.7 billion for new commercial equipment leases and loans.
Receivables over 90 days remained at 1.0%. July's credit approval ratios
remained relatively flat when compared to June. Total headcount rose, to
11,028 the seventh consecutive rise in employment for the MLI-25 companies.
"Leasing and finance companies enjoyed strong performance in July,
particularly with respect to credit quality," said ELA President Kenneth
E. Bentsen, Jr. He added, "The numbers seem to suggest that equipment
demand is solid, as are the balance sheets of businesses acquiring this
equipment."
September 2006: Volume 1, Number 12
Total Bankruptcy Cases Fall to Lowest Level Since 2001
Tuesday, August
29, 2006
Bankruptcy filings fell
9.3% during the 12-month period ending June 30, 2006, its lowest level since
the 12-month period ending September 2001, according to data released by the
Administrative Office of the U.S. Courts.
Bankruptcy cases filed in federal courts during that period totaled
1,484,570, down from the 1,637,254 bankruptcy cases filed for the 12-month
period ending June 30, 2005.
In the 12-month period ending June 30, 2006, business filings dropped to
31,562 down 2.6% from the 32,406 filings reported in the previous 12-month
period.
Of the total number of bankruptcy filings in the 12-month period ending June
30, 2006, there were 1,164,815 Chapter 7 filings, a 2.6% drop from the
1,196,212 Chapter 7 filings in the 12-month period ending June 30, 2005.
Chapter 13 filings, the next largest group of filings, totaled 313,085 in
2006, down 27.9% from 433,945 Chapter 13 filings in 2005.
Chapter 11 filings also fell in this 12-month period. Chapter 11 filings
totaled 6,224 as of June 30, 2006, down 7.1% from the 6,703 filings for the
12-month period ending June 30, 2005.
Only Chapter 12 filings increased. Chapter 12 bankruptcy filings totaled 360,
up 24.1% from the 290 Chapter 12 filings in the 12-month period ending June
30, 2005.
Click here for a complete listing of the data by quarter
with charts.
September 2006: Volume 1, Number 11
Report: Global Credit Quality Shows Modest Improvement in
August
Thursday, August
31, 2006
Kamakura Corporation,
provider of risk management information, processing and software, released
its monthly global index of troubled companies for August. Kamakura reported the index improved
slightly in August, the first improvement after three consecutive months of
deterioration in credit quality.
The Kamakura
troubled company index declined in August to 6.8% of the global corporate
universe, down from 7.1% in July. Most of the improvement in the index came
in the last week of the month when stock prices rallied strongly.
The index reached its 16-year low of 5.5% in April 2006 and its 16-year high
of 28% was reached in September 2001, the worst part of the last recession.
In percentile terms, August credit conditions rated better than 85% of the
monthly periods over the last 16 years, an improvement from 82% last month.
The troubled company index averaged 13.2% over the 1990-2006 period.
Kamakura
defines a troubled company as a company whose default probability is in
excess of 1%. The index covers 16,000 public companies in 29 countries in
Europe, North America, Asia, the Middle East and Africa, including the United States, Canada,
Germany, the Netherlands, France,
Switzerland, and the United Kingdom.
"Most of August saw a continued deterioration in corporate credit
quality, but the sharp rally in stocks toward the end of the month resulted
in a net improvement in the index," said Warren Sherman, Kamakura president and
chief operating officer. "The number of companies with default
probabilities between 1% and 5% fell slightly in August to 5.0% of the global
public company universe, down 0.2%. Companies with default probabilities
between 5% and 10% fell 0.1% to 1.0% of the universe. Companies with default
probabilities between 10% and 20% also fell 0.1% to 0.6% of the universe. The
number of global companies with default probabilities over 20% increased,
however, by 0.1% to 0.3% of the universe."
September 2006: Volume 1, Number 10
Production Finance Provides Purchase Order Financing to Drinks Americas
As seen in abfjournal
Drinks Americas Holdings, Ltd. has entered into a purchase order financing
facility from Production Finance International, LLC to provide the underlying
support for the production and launch of Trump Super Premium Vodka.
Drinks Americas
has begun to presell Trump Super Premium Vodka and has received purchase
orders and commitments for in excess of $5 million. The Company believes that
additional orders will be placed as the product is marketed on a national and
international basis.
John Kubiak, president and CEO of PFI, said, "Unlike conventional banks,
factors, or asset-based lenders, PFI provides financial support based on the
customer's purchase orders, and, after assisting with the creation of
inventory, enables its customers to turn their receivables into cash. We
predominantly look to the market demand for the customer's products, coupled
with demonstrated management expertise. Drinks Americas certainly has
demonstrated the market demand for its products and the ability of its
management team, and we look forward to a long and mutually profitable
relationship with the Company." In addition to the recently announced
launch of Trump Super Premium Vodka (which generated initial orders of over
$5 million), Drinks Americas is expanding the marketing of Newman's Own
Lightly Sparkling Fruit Juice Drinks and is introducing new lines of Newman's
Own Sparkling Water and Newman's Own Fruit Teas.
Patrick Kenny, CEO of Drinks Americas, said, "The PFI credit facility
will enable Drinks Americas to execute its business plan with the confidence
that we will keep pace and grow with the demonstrated demand for our
products. It is a major milestone for the Company that we have this important
part of our combined financial plan and growth strategy underway."
Drinks Americas
develops, owns, markets, and nationally distributes alcoholic and
non-alcoholic premium beverages that are often associated with renowned icon
celebrities. Drinks' portfolio of premium alcoholic beverages includes Willie
Nelson's Old Whiskey River Bourbon and Bourbon Cream and Roy Yamaguchi's Y
Sake. Drinks' non-alcoholic brands include the distribution of Paul Newman's
Own Lightly Sparkling Fruit Juice Drinks.
August 2006: Volume 1, Number 9
Enesco Group Retains Jefferies & Company to Pursue Debt
Financing
As seen in abfjournal
Enesco Group, Inc., a provider of giftware and home and garden decor, has
retained Jefferies & Company, Inc. to assist the Company in pursuing
alternatives for debt financing.
Basil Elliott, president and chief executive officer of Enesco, stated,
"Securing financing to replace our current credit facility is a top
priority for management. To this end, we have engaged Jefferies to help us
evaluate and pursue various options pertaining to debt financing for
Enesco."
August 2006: Volume 1, Number 8
Report: Industrial Manufacturing Industry Shows Strong Growth
in 2006
As seen in the Monitor Daily
Plant start-ups in North America have been on the rise within the
industrial manufacturing industry throughout the first half of 2006 and the
expansion appears likely to continue throughout the year, according to data
released by Industrial Info Resources.
During the second quarter of the year, 165 new plants, representing almost
26,000 new jobs, became operational in the United
States and Canada. In the third quarter, 136
plants are scheduled to open their doors, adding another 25,000 new jobs to
the year's totals.
So far, 2006 has already surpassed 2005's total of just over 240 new plants
becoming operational.
The Southeastern United States leads the
expansion with 32 new plants opening their doors in the third quarter.
The report states: "All in all, 2006 has already surpassed 2005's totals
for new plants. With the entire fourth quarter yet to come, this lead in new
plants opening their doors should only widen. While it is still too early to
make predictions as to how 2007 will shape up, early indications point to a
very good year, in terms of plants becoming operational within the Industrial
Manufacturing industry."
August 2006: Volume 1, Number 7
Herbalife to Undertake Potential Refinancing
As seen in abfjournal
Herbalife Ltd. and its
indirect subsidiary Herbalife International, Inc., are considering a
potential refinancing transaction with a new senior secured credit facility.
If the refinancing is consummated, certain of the proceeds may be used to
repay or redeem substantially all of Herbalife's existing debt, including its
outstanding 9 1/2% Notes due 2011 and fund closing costs.
Herbalife is a network marketing company that sells weight-management,
nutritional supplements and personal care products intended to support a
healthy lifestyle.
August 2006: Volume 1, Number 6
Regions Financial, AmSouth Announce Merger Agreement
As
seen in Monitor Daily
Regions Financial, parent company of Regions Leasing, and AmSouth
Bancorporation announced that they have agreed to merge, forming one of the
top 10 bank holding companies in the United States.
The new company will have almost $140 billion in assets, hold nearly $100
billion in deposits and operate 2,000 branches in 16 states across the South,
Midwest and Texas.
Combined, the two companies employ 37,000 people. The Regions name will be
retained.
Jackson W. Moore, chairman, president and chief executive officer of Regions,
will be chairman of the combined company. C. Dowd Ritter, chairman, president
and chief executive officer of AmSouth, will be the president and chief
executive officer of Regions.
"AmSouth shares Regions' passion for delivering superior customer
service, and the combined company will be in an excellent position to raise
service standards," said Moore.
"Our companies have similar goals, shared values and solid experience in
putting organizations together. We will take a deliberate, methodical
approach to integrating our companies, making certain that customers continue
to receive high quality service.
"I am confident the new Regions will emerge as the leading regional
financial services provider, delivering superior shareholder returns on a
consistent basis."
"Combining AmSouth and Regions creates a company with market-leading
positions in some of the best markets in the country," added Ritter.
The agreement provides for a stock-for-stock merger in which 0.7974 shares of
Regions will be exchanged, on a tax-free basis, for each share of AmSouth
common stock. Based upon closing stock prices of both companies on May 24,
2006, the proforma combined market capitalization of the new institution
would be approximately $26 billion.
July 2006: Volume 1, Number 5
KPS Special Situations Funds Acquires Cloyes Gear; LaSalle
Provides Financing
As seen in abfjournal
KPS Special Situations Funds announced that a newly formed affiliate has
acquired a controlling equity interest in Cloyes Gear and Products, Inc.
Financing for this transaction was provided by LaSalle Business Credit, LLC.
Other financial terms were not disclosed.
KPS will invest substantial capital in Cloyes to fund growth opportunities.
Cloyes' previous owners have retained a minority ownership interest in the
Company, and Trevor Myers will continue to serve as Chief Executive Officer
under KPS' ownership. Myers and his management team will implement a business
plan developed in partnership with KPS focused on improving operations and
investing in select return-driven capital improvement projects.
Raquel Vargas Palmer, principal of KPS, said, "Trevor Myers and his team
have built an extremely impressive business. Cloyes has led the trend in fuel
efficient timing drive systems, formed global strategic relationships, and
constantly evolved to better serve its customers. We look forward to building
the Company through new business initiatives and acquisitions."
Myers said, "As a family-owned business, it was important for us to find
the right partner - one that would support Cloyes' growth and dedication to
quality and innovative products. KPS was an obvious choice given its
commitment to manufacturing excellence, its successful investment track
record, and its experience in investing in the automotive sector. Our
customers can expect that we will continue to provide innovative technology
along with world class products and service."
Cloyes is a supplier of timing systems and components for automotive engines
and enjoys a dominant market position in the North American automotive
aftermarket under the Cloyes and Dynagear brand names.
July 2006: Volume 1, Number 4
U.S. Automotive Industry Plans Aggressive Project Spending in
2007
As seen in the Monitor Daily
With $9.2 billion worth
of project spending planned at automotive assembly and tier supplier
manufacturing plants in North America through the end of 2007, the North America automotive industry is maintaining a
healthy level of spending in spite of the downsizing of domestic automakers,
a new report from Industrial Info Resources finds.
A reflection of this trend shows that a good deal of the planned project
expenditures are for new and expanding operations (many of them foreign
owned) in the South, as opposed to the traditional U.S.
manufacturing hub surrounding the Detroit
area.
Traditional American-based automotive manufacturers and tier suppliers are
facing fierce global competition, which is arriving on U.S. shores in growing numbers.
According to Dave Pickering, vice president of industrial manufacturing
industry for Industrial Info Resources, "After decades of growth for
American automakers, the industry is now under assault as the war between
American and foreign automakers heats up for the ever important market
share."
July 2006: Volume 1, Number 3
GDP Growth Revised Up to 5.6%; Economy Growing at Faster Rate
Than Expected
As seen in abfjournal
The U.S. economy is growing at a faster rate than expected, according to the
U.S. Commerce Department. In newly released data, the department pushed its
estimate of first-quarter growth in gross domestic product 0.3 percentage
points up from the 5.3% that it reported a month ago.
The output of goods and services produced by labor and property located in
the United States increased at an annual rate of 5.6% in the first quarter of
2006, according to final estimates released by the Bureau of Economic
Analysis. In the fourth quarter, real GDP increased 1.7%.
The increase in real GDP in the first quarter primarily reflected positive
contributions from personal consumption expenditures (PCE), exports,
equipment and software, and federal government spending. Imports, which are a
subtraction in the calculation of GDP, increased.
The acceleration in real GDP growth in the first quarter primarily reflected
an upturn in PCE for durable goods, an acceleration in exports, an upturn in
federal government spending, and an acceleration in equipment and software
that were partly offset by a downturn in private inventory investment.
Click here to read the Commerce Department report in its
entirety.
July 2006: Volume 1, Number 2
Study: More IT
Executives Turning to Leasing
As per seen in the Monitor Daily
Procuring IT equipment through leasing is one option to better manage
technology assets, according to a poll of senior IT executives conducted at
Forsythe Technology's 2006 Executive Customer Council.
The survey found that 38% of participants report that simplifying technology
refresh is one of the most compelling reasons to lease IT solutions.
"Even companies with substantial cash reserves discover there are better
ways to use that cash than tying it up in depreciating assets such as IT
equipment," said John Carcone, senior vice president of financial
services at Forsythe.
"As interest rates increase and money gets more expensive, it's
important to determine the best method for acquiring and financing needed IT
equipment," Carcone added. "One option is leasing, which matches
the company's financial commitment and internal useful life projection, plus
provides fixed scheduled payments to simplify expense budgets, offers a hedge
against rising interest rates, protects businesses from inflation and allows
companies to project future cash outlays with greater accuracy."
The survey also found that IT executives continue to have issues with
estimating the useful life of IT equipment and matching it to business goals.
Seventy-five percent of respondents said that the estimated useful life of
technology is the most important factor they use in determining IT investment
decisions, but almost half (45%) say they inaccurately project the useful
life at least 40% of the time.
"Working with a trusted advisor that understands technology lifecycles
and provides flexible terms for upgrading and refreshing equipment can help
companies make proper procurement decisions," Carcone said.
Twenty senior IT managers from a broad range of companies representing nearly
$130 billion in aggregate revenue in the industry were surveyed during Forsythe
Technology's 2006 Executive Customer Council.
June 2006: Volume 1, Number 1
Analysts: Fed Set to Raise Rates Again
As per seen in the Monitor daily
Across the board, Fed watchers are in agreement that the Federal Reserve will
raise rates another quarter point when the Federal Open Market Committee
meets June 28-29. For nearly two years the agency has struggled to maintain a
delicate balance between economic growth and inevitable inflation. It's a
struggle most analysts agree, at least for mow, is likely to continue --
despite indications the economy is slowing.
Both industrial and manufacturing production declined in May, according to
Fed data. But industrial output is still up 4.3% over the same period in
2005, and consumer confidence was up slightly in June, following a slight
drop in May.
A quarter-point hike would push short-term interest rates to 5.25%, and mark
the 17th straight rate increase since the Fed began its tightening policy in
June 2004. According to the Wall Street Journal, futures markets are
predicting a 50% probability that the Fed will raise rates again in August,
to 5.5%.
It's an assertion Fed Chairman Ben Bernanke has done little to assuage. In a
June 5 speech, Bernanke reiterated his pledge to remain "vigilant"
and commented that: "core inflation measured over the past three to six
months has reached a level that, if sustained, would be at or above the upper
end of the range that many economists, including myself, would consider
consistent with price stability and the promotion of maximum long-run
growth."
Meanwhile, analysts watching from abroad expect the rate hikes will continue
throughout 2006 in the U.S.
followed by drastic cuts next year. The Chief Economist of National Bank of Australia,
Alan Oster, said in a recent interview with the Asian press that he believes
the Fed will cut rates three times in the second half of 2007.
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