October/Convention 2004
Is It Really A New Game?
Borrowers Appear to Hold the Winning Hand

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An Industry Focused Approach Gives Edge to Lenders, Borrowers Alike
By Joseph F. Nemia

As competition becomes more and more heated, companies are seeking lenders with industry focused as well as geographically focused professionals. Deep industry knowledge provides fundamental support for highly efficient lending service, giving the lending team insights into the customer’s situation that help shape quick, well-tailored solutions. (Ref # GEN006)

Accelerating at a Torrid Pace: Second Lien Loan Issuance in 2004
By Colin Cross

Volume for second lien loans began to surge in 2003 and continues at a torrid pace in 2004. What factors led to the transition of this market from an outlier of the capital markets, accounting for less than one percent of asset-based deals to a mainstream credit product offered to borrowers on a regular basis? (Ref # IND055)

Wake Up and Smell the Cycle… Revisiting the Lessons Learned From Past Indiscretions
By Michael J. Bedore

Less than two years ago, the economy was in a recession, corporate bankruptcies were at historical highs, and workout groups scurried to recover from the indiscretions of the late-90s. Now, it’s summertime, and the money is easy. Unfortunately, intense competition is forcing fundamental credit tenets to be compromised in order to both “win” new business and retain existing accounts. Can we benefit by revisiting the tough lessons learned from the past? (Ref # IND052)

Checking Your Blind Spots… Preparing for a Borrower’s Bankruptcy
By Howard Brod Brownstein

Planning for your borrower’s bankruptcy proceeding must be systematic and comprehensive. While it’s easier when you have ample time to prepare – perhaps even to see if a “prepack” is possible – such preparation usually must be made with a tempo of controlled urgency. (Ref # BANK011)

Playing to Win: How Appraisers Are Helping Lenders Secure Deals & Avoid Losses
By Kenneth S. Frieze

Many lenders are anticipating that when the current credit cycle turns, aggressive deal structures will prove problematic. While there are a myriad of challenges that a lender must deal with in a troubled situation, the accurate valuation of assets should not be one of them.
(Ref # APP020)

Treasury Management Services: Maximizing Liquidity In An Asset-Based Structure
By Jim Connolly

Companies have a lot of choices today when it comes to providers of treasury services. But because of the nature of the asset-based relationship,
there are inherent synergies when the credit facility is coupled with lender-provided treasury management services. (Ref # CRD016)

Cash Flow Recovery Sends Asset-Based Lenders Scouring for Deals:
“O Issuance, Wherefore Art Thou?”
By Daleep Akoi

Asset-based loan issuance in the first half of 2004 touched $22 billion on the back of working capital, acquisition related and dividend
recapitalization deals. If the market manages to generate a number even close to that in the second half, it will be thanks to lenders looking
inward at their portfolios or throwing away some caution on long-held risk parameters in order to book new dealflow. (Ref # IND056)

Protect Lenders From the Unknown…

Viewing the Examination Scope as a Dynamic Concept
By David K. Hanley

One of the first questions a due diligence analyst asks when informed of an upcoming exam is “What’s the scope?” Although a natural reaction
given the nature of the job, there are times when examiners need to be reminded that the examination scope is a dynamic concept, and that the
whole point is not merely to fulfill the scope but to satisfy the client’s needs. (Ref # FIELD004)

The Final Showdown: No More Bluffing In Today’s Competitive Marketplace
By Ken Chmelko

The lending market these days is much like a game of showdown poker where all of the cards are being played face up. The lenders at the table run
the full gamut: Some are strategically waiting for just the right cards to fall their way while others simply try to win all the chips by outbidding
the other players. GMAC Commercial Finance shares its view of winning in today’s competitive marketplace. (Ref # IND053)

Intellectual Property Financings: Finding Value In a Concept
By Edward P. Meintzer

The $1.15 billion Levi Strauss and Co. deal that closed in September 2003 highlights that there is demand from corporations for intellectual
property-based financing. According to Moody’s, there have been $10 billion in intellectual propertybacked securitizations completed since 1997.
Why are so many asset-based lenders reluctant to use intellectual property as collateral support for a loan? (Ref # LSP017)

Tailored To Fit: Defining Rights & Priorities with Intercreditor Agreements
By Scott C. WallaceIntercreditor agreements are an important part of financings with any borrower whose assets also secure
another obligation. The rights and obligations of the different lienholders can be tailored to fit each
unique set of circumstances. In the event the parties find themselves in court, the intercreditor agreement
generally will be enforced. (Ref # LGL092)

Debt Market Considerations:

Today’s Borrowers Are Seeking the Optimal Capital Structure
By Jim Connolly

With so many investors competing for transactions in the current buyers’ market, borrowers expect their lead banks to sharpen their pencils and come up with the best terms and conditions.
Ultimately, they also want a lender that can read an array of markets in real time, move fluidly
between them and select those with optimal execution.
(Ref # IND054)

Columns

TURNAROUND CORNER
The Power of the Plan: Effective Implementation in Acquisition Financing
By Baker A. Smith

As asset-based lenders increasingly seek financing opportunities – and competitive advantage – through distressed company acquisitions,
turnaround plans will play a larger role. The plans will not only assist the lenders with their due diligence but also serve to reduce their
risk of loss once the deal closes. (Ref # MERG009)

PROFILE:EXECUTIVES
A Profile of Success: A Team Approach to Client Success
A Profile of Russell E. Brant, Division President of Textron Financial Business Credit

Textron Financial’s Russell Brant, recently chosen to lead the company’s Business Credit Division, knows first-hand the importance of a team approach.
The son of a coach and one-time professional football player, Brant learned early on the value of teamwork in ensuring success. He now puts these lessons
in play on a daily basis, with the results that both client and leader look for. (Ref # EXEC064)

LEGAL EYES
Using Health Care Receivables as Collateral…Expect Some Twists & Turns
By Matthew E. Franks

Secured financing based on a health care provider’s receivables, although becoming arguably easier, presents a number of special
challenges. The substantial regulation of the health care industry creates unique risks both with respect to the collateral value
and to the financial stability of the provider itself. Lenders are advised to pay close attention to current case law and legislation
surrounding these issues. (Ref # LGL034)