ABF Journal, October 2007
October 2007

Is the Party Over?


The Changing Liquidity Market… Is the Party Over?

By Anthony Foti, PNC Capital Markets.

Just a few short months ago, borrowers had more options than ever before to fund acquisitions and organic growth. However, recent shifts in the market could indicate that, while the liquidity party may not be over, the guests may be looking for the door. (Ref # IND099)

In the Midst of a Major Storm
By Ricardo S. Chance, KPMG Corporate Finance LLC

If the National Hurricane Center were to name a hurricane after the global credit crisis that has ravaged the markets over the last month, it would be called “Lester Leverage” — a storm so strong that it wipes out billions of dollars of value and sends investors fleeing.
(Ref # IND100)

A Tale of Two Loan Markets
By Tod Trabacco, LBC Credit Partners

While it may not seem like these are the best of times, LBC Credit Partners’ Tod Trabacco sees the next 12 months as a period of greater deal flow and better risk-adjusted rations for the ABL market.
(Ref # IND101)

U.S. Bancorp Specialty Finance… Inspiring Future Growth
By Amanda Gutshall, Assistant Editor

In October 2006, U.S. Bancorp announced it was combining five of its units into a Specialty Finance Division, providing increased and specialized service to its customers in those sectors. This month, ABF Journal spoke with Sal Maglietta who runs this new division and with Sam Philbrick, president of U.S. Bank Business Credit. (Ref # EXEC053)

Offering Industry Specialization to Your Financing Capabilities
By Craig Reynolds, GE Corporate Lending

Specialty lending is about knowing not only the customers’ needs but also their industries. This type of lender must be future looking, one that is willing to see the risk as well as the rewards in lending to a specialty manufacturer. (Ref # COMP024)

Some Cracks in the Facade… Funds Contemplate “The Next Wave”
By Howard Brod Brownstein and M. Tatum Pursell, NachmanHaysBrownstein, Inc.

While the “next wave” of distressed businesses may not have reached the offices of hedge and equity funds yet, it appears the tides may be changing. How will these players deal with the credit crunch? Howard Brownstein and Tate Pursell consider the issues at hand. (Ref # IND102)

2007 M&A Activity — Ending With a Bang or a Whimper?
By Christopher Moraff, Associate Editor

As concern over the health of U.S. credit markets reverberates throughout the economy, a look back at the first half of 2007 offers a glimpse at the reigning optimism that seemed to characterize the deal market until well into the current crisis. (Ref # MERG005)

Amid Feasts and Famine, ABLs are Open for Business
By Maria C. Dikeos, Reuters Loan Pricing Corporation

With the leveraged loan market largely shut down — at least in the near term — asset-based lending has once again emerged as a critical liquidity tool for corporates and sponsored entities. This is not an unfamiliar role for asset-based lenders given the product’s traditional,
counter-cyclical traits. (Ref # IND103)

The Case for Appraisals Performed by Liquidators
By Roger Meyers, Great American Group

On the surface, M&E appraisals may look to be pretty much the same. However, it is what the party doing the appraisal “brings to the table” that enhances his value to the lender and elevates his product above that of his competitors. (Ref # APP035)

The Making of a Brilliant Supply Chain Finance Solution
By Robert J. Bernabucci, UPS Capital

In a globalized business world, a brilliant corporate strategy executed flawlessly can be simultaneously painful for a company. The global supply chain provides a good example of this paradox.
(Ref # LSP029)

Using Trade Credit Insurance to Enhance Liquidity and Collateral
By John Caffrey, Euler Hermes ACI

In these days of unsteady credit markets, trade credit insurance is a good idea to consider when committing to a deal. By partnering with a trade credit insurance carrier, lenders can minimize risk, keep costs low and grow the top line with safety and assurance. (Ref # INS014)

Integrated Infrastructure Adds Money to Your Bottom Line
By Russ Opper, Bayside Business Solutions, Inc. and Michael Charleston, Cerra & Associates

To improve the bottom line and compete in a changing market, lenders need a single system that expands control, provides collateral-specific monitoring and integrates credit management with transactional data. Such lenders will reap the rewards of increased revenues and mitigated risk. (Ref # TECH012)

Newton & Fraud: What Goes up Must Come Down
By Gregory J. Urbanchuk and Stephen J. Scherf, Executive Sounding Board Associates, Inc.

Why do so many asset-based lenders fail to recognize fraud until it’s too late? This month’s columnists provide actual case studies from the ABL world, which uncover how the fraud was eventually detected, the economic fallout and simple tools to help detect any “rats in the woodpile.”
(Ref # FRD018)

Current Economic Climate Creates Uncertainty for Second Lien Lenders
By Gary B. Rosenbaum, Jean B. LeBlanc and Jason W. Hardman, DLA Piper US LLP

The current economic market has led many financial observers to anticipate an upsurge in the number of future bankruptcy filings that many believe will lead to a similar upsurge in the amount of litigation regarding the enforceability of bankruptcy waivers normally granted by second lien lenders to first lien lender. (Ref # LSP028, LGL078)