November/December 2002
Inaugural Issue


Asset-Based Lending: Good to Grow
By Kevin Riordan

To assess the state of asset-based lending, ABF Journal recently spoke to nine top executives at major asset-based
lending companies. While a full economic rebound seems unlikely, the members of this group are confident about the short and
long-term prospects for the industry. (Ref # IND024)

Fallen Angels… Unique Opportunities and Challenges
By Barry Bobrow

Recent slowdowns in consumption and production have led to a significant deterioration in credit quality across the corporate
landscape. One symptom of this credit decline is the number of “Fallen Angel” companies that have lost their investment grade
ratings. In the following article, Barry Bobrow explores the unique opportunities and challenges these transactions present to
asset-based lenders. (Ref # IND025)

Why’s & Wherefore’s of Term B Lending
By Theodore L. Koenig

As the ABL market continues to consolidate, fewer options are available to companies in need of financing and borrowers find
themselves scrambling to fill the void left by such consolidations.Term B lenders provide additional financing needed when a
borrower’s senior facility has been stretched due to tighter lending formulas. (Ref # LSP004)

Appraising in a Vanishing Market
By Robert P. Gaudiosi

In today’s fast paced world, technological obsolescence is measured in months rather than in years with pricing shifts just
as volatile. Add the complications of the post 9/11 business environment and the appraiser is in the position of attempting to
appraise assets in a market with few buyers and constantly changing comparables. (Ref # APP007)

Middle Market ABL: Good Deals Are Still Getting Done
By Barrey Davis

While there have been significant changes in the asset-based lending market, driven by the recent economic decline, reduced
competition and increased regulatory oversight, lenders find themselves concentrating on the basics. As a result, traditional
performing companies have still been able to find adequate financing and good deals are still getting done everyday. (Ref # IND026)

Marketing the ABL Product in Turbulent Times
By Gail K. Bernstein

Asset-based lenders can succeed under virtually any economic climate if they can find ways to creatively seek out new referral
sources, market effectively, track performance and manage risk. All four are critical components to a successful marketing strategy
— and inextricably linked to one another. (Ref # IND027)

Fraud Detection… Art or Science?
By James A. Barry

Asset-based lenders may swap war stories about companies that devise grandiose schemes to defraud them, but the facts are
generally less romantic. Fraud usually stems from a company trying to cut corners to compensate for a short-term cash shortage or
other financial difficulties. (Ref # FRD001)

Serving Your Clients Through Third-Party Providers
By Lawrence A. Marsiello

Going it alone in today’s economic environment is a tall order for any lender. Many lenders have successfully relied on a variety
of resources provided by other financial companies and service providers to meet the ever-changing needs of their clients. (Ref # IND028)

ABLs Beware: Some Laws Can Extinguish, Subordinate or Impair Your Lien Position
By Peter S. Clark II, Esquire

An asset-based lender’s perfected lien position may be primed or impaired by federal or state statutory liens that arise outside
the rubrics of Revised Article 9 of the UCC. In addition, various nuances within the statutory framework of the UCC place a
lender’s lien at risk.
(Ref # LGL091)

Retail Financing in Today’s Environment
By William J. Mayer

The retail industry is undergoing unprecedented turmoil stemming from a variety of reasons. As a result, opportunities abound
for those financial institutions with an understanding of retail finance and a long-term commitment to serving the needs of
the industry. (Ref # RETAIL002)

A Boom Time for Volume; A Bust for Collateral Values
By Daleep Akoi

While an increase in deal flow has prompted competition, and hence better terms for some issuers, a decline in collateral values
in the slow-mending economy are pinching lending decisions and encouraging stepped-up due diligence. (Ref # APP006)

How Accounting Executives Looked the Wrong Way
By Robert Howell

Ironically, except in such high-profile cases as Enron and WorldCom, little criticism has been directed at finance executives
and finance departments in general. In fact, they should be the first line of defense against aggressive accounting and reporting
practices. (Ref # ACC001)

Peter Schwab and Foothill Capital
By Gene Swift

In this profile, Peter E. Schwab shares an abridged history of Foothill Capital Corporation and his own somewhat-unorthodox path to becoming the company’s chairman and CEO. Schwab manages through his charismatic demeanor to sustain the Foothill corporate culture that has seen the company through more than three decades of success. (Ref # EXEC001)

The Care and Feeding of Turnaround Managers
By Howard Brod Brownstein, CTP

Although different from one another, asset-based lenders and turnaround managers are inhabitants of the same “turnaround
community” and their understanding of each others respective domains often results in mutual success. (Ref # TM003)

Fleet Capital & Nortek: Bells and Whistles of the Deal
By Brian McDonald

When Rhode Island-based Nortek Inc. needed to restructure debt and secure working capital, it didn’t have to look very far. In
August, Fleet Capital completed a $200million asset-based credit facility using Nortek’s accounts receivable, inventory and
intangible assets to secure the financing. This article takes an in-depth view into that transaction. (Ref # DLS001)

Revised Article 9 — Greater Guidance Yet Questions Remain
By Jeffrey M. Wolf & Jeffrey M. Rosenthal

This article focuses on the post-default procedures under Part 6 of revised Article 9, including a discussion of the notification
requirements and the procedures regarding the disposition of collateral. (Ref # LGL007)

Today’s “New” Factoring Clients… Diamonds in a Changing Economy
By Patricia J. Burns

The factoring industry has weathered recessions and downturns in the past, but today’s downturn presents a challenge due to the
“new” economy whose industrial output has been replaced largely by intellectual output and services. The factor, therefore, must
seek to find value in less tangible collateral to remain relevant to the economy of today.
(Ref # FAC010)

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