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ABFJ-OCT-2010

October 2010

Annual Conference Issue
Vol. 8 No. 7
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FEATURES

Ready to Stretch? Private Equity Investors Demand Creativity & Flexibility From Middle-Market Lenders - Having weathered the ravages of the last two years, some businesses are stronger than ever and are now experiencing unprecedented and growing EBITDA margins. At the same time, acquisition-hungry private equity investors are ready to do business with owners who are anxious for an exit. As a result, purchase prices of such businesses are escalating and will test the limits of secured financing as a new pricing paradigm emerges. Are lenders ready to stretch?
The Theory of Natural Selection: An Interview With Bob Arth - For this year’s fall conference issue, Howard Brod Brownstein chats with Bank of America Business Capital’s Bob Arth, the recently appointed president of Bank of America Business Capital. Brownstein asks Arth a question that may be on the minds of asset-based lenders: How do they do it?
The Skinny About Workouts – De-Mystifying the Workout Banker’s Motivations - When a loan moves from “the line” to workout, the rules of the game change. While a transfer to workout does not necessarily mean that the bank has decided they don’t want the business anymore, it does mean that at a minimum the bank has a heightened level of concern about the borrower’s ability to continue to comply with the terms of their loan agreements. Carl Marks’ Kristina Anderson de-mystifies the workout banker’s motivations.
Factoring Update: The Big Chill of 2008 Shows Few Signs of Abating - Has the factoring market rationalized? Factoring veteran Tom Siska warns us not to put away our protective gear … the Big Chill of 2008 probably won’t full thaw for quite some time.
Distressed Debt & the Chief Restructuring Officer – Understanding the Philosophy, Psychology and Politics (Part 1 of 2) - In Part I of this article, Ken Naglewski of Seabiscuit Partners examines classical turnaround theory and practice in relation to the realities of organizational dynamics and the behavioral aspects of the players in a distressed debt situation. The author opines on the necessity of a CRO assessing the political realities of each situation and developing a political style and game plan that has the best chance to be successful in a particular situation. In Part II of this article, the author reinforces the importance of dealing with political realities of distressed debt situations, provides some examples from real situations and potential strategies for dealing with different situations.
Elegant & Effective … Letters of Credit in Commercial Loans and Bankruptcy (Part 3 of 3) - For many years, letters of credit have been used to facilitate sales of goods and to provide credit enhancement for all kinds of contractual obligations. Despite the widespread use of letters of credit over the years, many view letters of credit as complicated and esoteric instruments. Part II of this series addresses security interests in letters of credit and the role of letters of credit in syndicated transactions. The third and final portion of this article focuses on the roles of letters of credit in commercial loans and bankruptcy. This part examines the treatment of letters of credit in bankruptcy.

CORPORATE/EXECUTIVE PROFILE

Golub Capital — Unique in Every Aspect - Without question, the news from Golub Capital has been steady even during the darkest days of the recession in which the loan market all but ground to a halt. ABF Journal spent some time with Lawrence Golub, the firm’s founder and president and the leader behind this remarkable success story…Reuters Loan Pricing ranked Golub Capital as the #1 traditional middle-market bookrunner in 2009. Buyouts Magazine named the company as the “Middle-Market Lender of the Year” for two years running. And in April of this year, M&A Advisor conferred it with the distinction of “Debt Financing Agent of the Year 2010.” The list of Golub Capital’s accomplishments seems to go on and on. Without a doubt, the provider of financial solutions with capital somewhere northward of $4 billion has been recognized for keeping a robust pipeline of deal flow while others in the space pulled back noticeably.

FROM ALL FACETS

TURNAROUND CORNER

The Data Driven Turnaround — Data Explosion Offers an Embarrassment of Riches, But Peril for Those Who Fail to Keep Pace - The pace of technological change has been rapid for the past generation, but it is only in looking back that one can begin to perceive broader trends in what has seemed to many to be a deluge of tools, gadgets and relentless complexity. While this generation of unrelenting technological progress has paid numerous dividends, it also represents considerable peril, especially for companies in distress. The operations of companies are becoming increasingly data-centric and so must successful turnarounds.

FACTORING FOCUS

Think Partners, Not Competitors – In Good Times and Bad, Banks and Factors Should Collaborate - Not so long ago, small- and mid-sized businesses had an all-you-can-eat buffet of capital. Investment, regional and community banks, asset-based lenders, hedge funds, factors and individuals all vied for the entrepreneur’s business — holding out carrots of competing rates and lighter terms. Banks competed with banks, and banks competed with alternative financing firms.

BANKRUPTCY UPDATE

Advisory Committee on Bankruptcy Rules Recommends Sweeping Revisions to Bankruptcy Rule 2019 - A New York bankruptcy court ruled that an unofficial, or “ad hoc,” committee consisting of hedge funds and other distressed investment entities holding Northwest stock and claims was obligated under a formerly obscure provision in the Federal Rules of Bankruptcy Procedure — Rule 2019 — to disclose the details of its members’ trading positions, including the acquisition prices.

LEGAL EYES

Dodd-Frank Act: An Overview for Community Banks - Trying to understand the whole of H.R. 4173, the Dodd-Frank Wall Street Reform and Consumer Protection Act, is tough. The Act is long, complex and if you are focusing directly on the credit crisis, the Act is not particularly intuitive. Grant Stephenson at the Columbus office of Porter White Morris & Arthur discusses the Act’s impact on community banks.

FINALCUT 

FinalCut: Judge Rules Ableco Can Proceed With Paul Hastings Suit - ABF Journal illustrator, Jerry Gonzalez’ visual interpretation of a top-ranked abfjournal.com news story according to our visitors.

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