October 2006
FIFTH ANNUAL CONVENTION ISSUE

It’s Not Your Granddad’s ABL… External Factors, Market Changes Alter the Face of the ABL Market
By Barry Bobrow, Wachovia Securities

With the past two years changing the ABL market, many participants may find themselves yearning for the old days. Barry Bobrow returns to ABF Journal to describe how the industry has gotten where it has and where it’s headed. (Ref # IND082)

Clouds on the Liquidity Horizon… In an Era of Complex Loan Structuring, How Will a Downturn Affect Lenders?
By Kathleen Z. Lepak, Citi Commercial Asset-Based Finance

When will the economy turn? And how will the industry be ready to handle it when it does? Kathleen Lepak of Citi Commercial Asset-Based Finance talks with six experts regarding the present and future of the ABL market. (Ref # CRD024)

Getting Into the Act: New Participants & Opportunities Take Center Stage in the Commercial Finance Arena
By Robert Rinek, Piper Jaffray

In the void created by the massive consolidations of the banking industry, new opportunities continue to emerge for hedge funds, private equity firms and the like. And it’s probably a safe bet that this trend will continue. (Ref # IND083)

Know Your Credit Agreement — Attention to Potential ‘Technical Defaults’ can Minimize Problems & Reduce Risk
By Stephen Klein, Capitalsource, Inc.

Certainly technical defaults aren’t trivial defaults — and when credit markets tighten or a lender hits a “rough patch,” even a minor instance on non-compliance can be troubling to a lender.

(Ref # CRD026)

Looking Beyond Current Data, Market Conditions Makes all the Difference When Determining Valuations
By Lester M. Friedman, Great American Group

A sudden rise or drop in certain industries can have a significant effect on the economy. Great American Group’s Lester Friedman discusses the overviews and projections of four key industries of interest to secured lenders. (Ref # APP031)

In & Out of Court, Stakeholders are Changing… But What Does it Mean for the Future of Restructuring?
By R. Edward Albert, III, Milestone Advisors, LLC

The increased power of alternative investment companies and distressed investor groups brings a new focus on absolute financial returns to restructurings and bankruptcies. They also provide alternatives to companies that might otherwise not be available. (Ref # CRD027)

Unions in Canadian Restructurings… Who’s the Gatekeeper?
By Kevin J. Morley and Orestes Pasparakis, Ogilvy Renault

Ogilvy Renault attorneys, Kevin Morley and Orestes Pasparakis, provide ABF Journal readers with an account of current decisions related to Canadian restructurings. (Ref # INTL030, LGL031)

Still Going Strong — Second Lien Loans Set New
Volume Records in 2006
By Mary D’Souza and Salvatore Settineri, GE Capital Markets

The second lien market is proving its resilience in 2006 as it continues to set new volume records. Turn to page 20 to find out
why this financial tool still proves to be attractive to lenders and borrowers alike. (Ref # LSP024)

When Will Then be Now? Looking for Divergent Credit Indicators to Merge
By Tod Trabacco, LBC Credit Partners

The traditional indicators utilized by market watchers to predict the turn of a credit cycle appear to be diverging.
But asset-based and senior lenders should be on the lookout for the convergence of economic and credit indicators. (Ref # CRD025)

On The ‘Experiential Edge’… The Lender’s Role in Retailing’s Design Revolution
By Stevan Buxbaum, Buxbaum Group

Lenders need to pay attention to the likes of Abercrombie & Fitch and Prada — and not just for fashion advice.
When it comes to store design, the rules are changing — it’s all about the “experiential edge.” (Ref # RETAIL011)

Effective Communication During Restructuring —
A Ten-Step Plan to Avoid a Downward Spiral
By Frank Salerno, River Communications

In these times of constant communication, companies are still finding it hard to get the word out there — to both consumers and employees. Salerno offers a ten-step action plan that gets everyone on the same page during a restructuring. (Ref # TM057)

Peel Back the Onion: 12 Principles for Better Cash Flow Planning & Forecasting
By William J. Hass and Shepherd G. Pryor IV, Teamwork Technologies, Inc.

Cash flow is the key to understanding business viability and enterprise value, and GAAP accounting is a weak tool for that purpose. Lenders and borrowers are well advised to “peel back the onion,” and examine the details to really understand the operational sources and the uses of cash. (Ref # TM059)

Columns

NEW ON THE SCENE
Clearly Bound to Exceed Clients’ Expectations… Veteran Industry Leaders Establish Boston-Based Crystal Capital

Earlier this year, Ed Siskin and Ward Mooney established Crystal Capital. And so far, their team has already underwritten six new transactions — undeniably a very strong start. (Ref # COMP016)

TURNAROUND CORNER
What Were They Thinking?

A Little Hindsight Goes A Long Way in Avoiding a Loan Default
By Ted Gavin, Nachmanhaysbrownstein

It has been said that tragedy, with time, becomes comedy. While a loan collapsing is hardly subject for laughs, perhaps with the benefit of hindsight we can learn some things that could have been done differently and outcomes that could have been avoided. (Ref # TM060)

LEGAL EYES
Avoiding Lender Liability in Foreclosures:
Dispositions of Collateral in Commercial Transactions Under Revised Article 9
By William Schoenholz and Danail Kazachki, Buchalter Nemer

The basic obligations of a secured party in a disposition of non-consumer goods are acting in good faith, proceeding in a
commercially reasonable manner as to all aspects of a disposition and following the specific duties in Revised Article 9. Failure to
comply may result in losing the ability to collect on a deficiency after a foreclosure as well as damages to afflicted parties.
Learn how these liabilities can be easily avoided by following proper procedures. (Ref # LGL062)

PROFILE OF SUCCESS
Hennessey Capital — A Small Business With Big Ideas

Hennessey Capital started out by taking the road less traveled. But this specialty finance company has built an impressive portfolio. Now, as clients put it, Hennessey Capital can help “from your first dollar to your first billion.” (Ref # COMP017)

PUTTING IT TOGETHER
The “Turned-Around” Perspective of Turnaround

Financing: Shifting Economics Reveal Untapped Potential
By Charles Garoklanian, PNC and David Mengel, Steel City Capital Funding

With experts agreeing a shift in the economy is inevitable, some companies will begin to struggle with signs of economic stress. As these issues begin to occur, businesses might want to turn to the world of turnaround financing to provide new opportunities for these companies. Recently, Steel City Funding seized one such opportunity. (Ref # TM058)