Monday, August 25, 2008
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-------------------------------------------------------------- Balboa Capital, Irvine, California "Unsigned Addendum by Lessor" On July 23rd, Leasing News published the "unsigned addendum by a lessor" asking "...for an opinion regarding a set of documents sent to the lessee by UPS for signature, and then at the end of the lease, when the $101 option is to be exercised, the lessee realizes the signed addendum was never return. The lessors wants a fair market value on an NC lathe from this small machine shop." July 25th, the response was overwhelming, calling it "...another one of their tricks," "Are you kidding? A mistake? Its part of their Business Plan," "I vote for the Lessee, not based on fraud but on simple contract law. There was an offer, the sending of the form," "These people should be exposed!" It was unanimous. Leasing News did not name the lessor, hoping to resolve the matter since contacting the following people at Balboa Capital were contacted six or more times by e-mail, from two different sites, plus called on the telephone several times: Mr. Patrick E. Byrne, President; Mr. Michael Losey, Director, Portfolio Management; Ms. Joy E. Heckendorf, Director of Marketing on July 8th by two separate email addresses and telephone starting on July 8th,2008. requesting a comment. No response was received. It is not Leasing News' position to determine who is right or wrong, but to decide if the complaint is legitimate to post on the Leasing News Bulletin Board. Here is a copy of the document signed by the lessee, but not returned signed by the lessor:
When the original contract was signed, Balboa Capital, according to Robert Moore, who operates a small machine shop in Northern California, signed the addendum that the NC lathe from Selway Machinery could be purchased for $101. He did not make up copy and states it was sent along with the other documents by UPS from Balboa Capital. He returned them. After the lease started, he received instructions to make payments to GE Capital, along with a large packet of the lease documents and other instructions. He admits he did not review the signed documents as the payments and term to GE Capital was what he agreed to. Not until he notified Balboa Capital that he wanted to purchase at the end did he get his with a "fair market value" and then an automatic Evergreen clause. He told Leasing News it is his intention to sue Balboa Capital and welcome others into his legal action. Signed Lease (six pages, 6.33mb download) Balboa Capital Default Letter ( 7 pages, 5.39mb download) Seeking Leasing News Readers Opinion Opinions on Unsigned Addendum -------------------------------------------------------------- Five Point Exits “Trigger Data”
One of the uses of “Trigger Data” is obtaining specific information from the data. In this instance, three major leasing companies were found to be using leads from credit reporting agencies of inquiries regarding lease applications. When a prospective applicant gets their consumer credit pulled or a business credit report is ordered, this inquiry is flagged. The major credit bureaus, business reporting agencies, and hundreds of sales generating companies make this information available as quickly as you want to pay for it. The purchaser of this information then utilizes it to make a “sales call,” most often by telephone, to pitch a lower price, better terms, compete with the original party who pulled the credit report. Three large leasing companies exist primarily on this method of obtaining sales to take clients away from those who originally ordered the report. Many companies report their sales leads being called by several other leasing companies the next day after running a credit report. Several report private telephone numbers or contact information that only comes from the credit inquiry. Most named in theses instances have been Balboa Capital, Irvine California, Direct Capital, Portsmouth, New Hampshire, and Five Point Capital, San Diego, California. David Gilbert, Co-Chief Executive Officer, Five Point Capital “In a recent Leasing News edition, you grouped Five Point Capital with some others in a story regarding triggers. It is not our practice to discuss marketing strategies publicly, but we feel this particular issue is important and wanted make sure that the correct information is being communicated to the industry. “Just to set the record straight, Five Point Capital has halted using credit triggers to acquire leads. When we sent you our earlier response, we had hinted that we were already reconsidering this form of acquisition. “The net of the analysis that led to our decision is that any benefits we see are outweighed by the negatives inherent in this type of effort, and as a result we had already informed the credit agency that we are stopping the program.” Trigger Part I: Trigger Leads---Part II Trigger Leads---Part III Trigger Leads---Part IV --------------------------------------------------------------- Add me to mailing list Any comments or suggestions are appreciated. Any news leads or tips are also appreciated. To subscribe: e-mail kitmenkin@leasingnews.org -------------------------------------------------------------- Classified Ads---Help Wanted Sales Person
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-------------------------------------------------------------- Leasing 102 by Mr. Terry Winders, CLP
Residuals One of the most important parts of a true or legal lease is the residual. For both tax and legal they require that the Lessor “prove” that they have a meaningful residual value after the lease terminates. This does not require that the equipment be worth 20% (except for leveraged leases where it is a requirement of RP2001-28) but the Lessor must prove that they expect to be able to extract that kind of value by releasing it or remarketing it or by assuming a 20% residual. It seems that some lessor’s view any residual as a risk that they are not willing to take so they better have documented proof of their ability to extract 20% or recognize they have a disguised conditional sales agreement for income tax purposes and a lease intended as a security for legal. The truth is that residuals actually make you money. If you add up the income from a $100,000 fully amortized loan @10% over 60 months with payments in arrears the total income would be $27,482.27. Income on a lease over the same arrangements with a 10% residual provides $29,734.04. The difference of $2,251.77 or 8.19% higher comes from the higher outstanding balance during the repayment period. The additional income can be realized from a PUT also, but a true lease offers additional income from a purchase option or extended lease payments. If you assume a residual then you need to protect it with maintenance requirements, good return language, and inspections. The risky residual comes from no recorded information about the lessee’s intended use, and poor, if not limited return requirements. Plus, on occasion, even lousy descriptions. You only get back what you describe so be complete and take pictures or include brochures. You can get manufacturers recommended maintenance requirements and make them part of your lease. That gives you a standard to litigate against if the equipment comes back in poor condition. The return language in your lease, if possible, needs to be equipment specific or at least industry specific. Our legal system indicates that you cannot require the lessee to return the equipment in like new condition because you need to allow for normal use. However, there are a multitude of requirements that do not upset the legal requirements that will protect your investment in the residual. For instance: The equipment must be able to perform the task to which it was manufactured for with no difficulties. No damage or missing parts and special paint or company logos must be removed and all working parts must meet manufactures standards. There are a lot of requirements depending on what type of equipment you are leasing. The more you create proper documentation the more professional you look. Customers like to deal with professionals. There is usually a separate return provision as an attachment to the lease when the residual approaches or exceeds 50% of the expected wholesale value at lease termination. If you are engaged in a steady flow of business from a vendor, I would suggest you get their suggestions for return conditions and put them in a return schedule that can easily be attached to the lease. It is also important to add a possible inspection fee at termination, if it requires an industry expert to make sure the equipment meets the return requirements. This statement informs the lessee that someone in the know will be looking at the equipment and that they cannot get something past you. If they have to keep it in good working order you be surprised how often they will want to keep the equipment at termination. I have suggested that you inspect the equipment during the term of the lease to make sure of its location, condition and hours of use. The new rules are going to require some standard of use to gage hoe lease payments will be impacted by over use. In this case the inspection is to make sure the lessee is living up to the maintenance standards. If not it is a default and a letter needs to be sent to require a cure of the default. Proper residuals taken after receiving and evaluating an equipment use and description form and then followed up with good maintenance and return language is an excellent way to conduct equipment leasing. Anything else puts you in the finance business and I hope you have a large loss reserve. Mr. Terry Winders, CLP, has been a teacher, consultant, expert witness for the leasing industry for thirty years and can be reached at leaseconsulting@msn.com or 502-327-8666. Previous #102 Columns:
(This ad is a “trade” for the writing of this column. Opinions -------------------------------------------------------------- Top Stories --August 18--August 21
Here are the top ten stories most “opened” by readers last week: (1) John Polizzi passes away (2) Paul Menzel, CLP, says “Goodbye” (3) LEAF to close former Pacific Capital location (4) In Memoriam: David Russell (5) Varilease $200 Million Loan Facility (6) Kit Heard of the Grapevine Reactions (7) Classified Ads---Credit/Irwin Leasing (8) Leasing 102 by Mr. Terry Winders, CLP (9) Marlin Hires Chief Risk Officer from CIT (10) Alert: Thomas J. Montgomery/Wellspring Healthcare
-------------------------------------------------------------- ****Announcement************************************** New ELFA Convention Website Now Online
"Financing New Frontiers" ELFA's 47th Annual Convention The 2008 Convention will offer three full days of educational sessions and networking opportunities beginning on Sunday, October 12 and culminating with a Mardi-Gras themed closing party on Tuesday evening, October 14. There will ample opportunity to make new contacts, renew old acquaintances, and benefit from a strong lineup of educational sessions. The program will emphasize emerging opportunities in international markets in keeping with the Convention's theme, "Financing New Frontiers." International-focused sessions include a case-study of a strategic partnership in India, a panel of equipment finance association executives from around the world, and an in-depth discussion of how to manage country credit risk when venturing overseas. In addition, each ELFA Business Council will offer a session addressing the specific concerns of their segment of the membership. The General Sessions promise to be informative and thought-provoking, as well; the speakers include: Monday General Session Tuesday General Session Tuesday Recognition Luncheon This is the annual meeting of the industry, and the extended schedule allows plenty of time to do it all. Register now! For full information on the 47th Annual ELFA Convention, and to register, go to ********Announcement********************************** -------------------------------------------------------------- Fernando’s View 2 Movies/3 top DVD’s to Rent this Week
Out in Theaters: Vicky Cristina Barcelona (The Weinstein Company): Viewers looking for a relaxing vacation in gorgeous Barcelona will love this new Woody Allen comedy, in which the ravishing Spanish city is as much a character as any of the people looking for love and freedom. Scarlett Johansson, in her third collaboration with Allen, plays Cristina, a young American filmmaker who comes to Barcelona on vacation with her more serious friend, Vicky (Rebecca Hall). While taking in the city’s beauties, they are romanced by Juan Antonio (Javier Bardem), a handsome artist whose fiery former girlfriend (Penelope Cruz) suddenly makes an appearance. Much lighter and sunnier than Allen’s recent British films, the movie is a breezy travelogue highlighted by Bardem’s suavity and Cruz’s ardor. Transsiberian (First Look International): Originally a director of lightweight comedies like “Next Stop Wonderland,” Brad Anderson has oddly but fascinatingly become a specialist in subtle suspense with “The Machinist” and now this very effective tale of international intrigue. Woody Harrelson and Emily Mortimer play American tourists on a weeklong train ride from China to Russia, whose troubled marriage becomes the least of their problems when they cross paths with mysterious, possibly dangerous passengers. Using high-digital cinematography to heighten the feeling of claustrophobia and dread, Anderson creates a fast-paced, increasingly suspenseful ride that, for once, deserves to be described as “Hitchcockian.” New on DVD: Miss Pettigrew Lives for a Day (Universal): Frances McDormand and Amy Adams are both delightful in this peppy story set in 1930s England. Guinevere Pettigrew (McDormand) is a governess who, out of a job for the umpteenth time, finds herself caught up in the life of a breathless young woman named Delysia (Adams), a flighty wannabe actress with Hollywood dreams. While Delysia rushes from one boyfriend to another, Miss Pettigrew is herself courted by a clothing-designer and wonders if she can make it through the day with her sanity intact. The interaction between serious McDormand and giddy Adams is marvelously complimented by the gorgeous period sets and dashing pace. The Small Back Room (Criterion): Michael Powell and Emeric Pressburger, known as “The Archers,” were the most interesting filmmaking team in England during the 1940s and 1950s. This often overlooked but masterful film, made in 1949 and now rereleased by Criterion in a shimmering restored print, remains a fascinating peek into a country after a war, and into a mind after a crisis. The story follows an expert in bomb disposal (David Farrar) whose problems, including alcoholism and wartime memories, are worked out in the room of the title. It sounds claustrophobic, but Powell’s creative style turns the confined environment into a breathing, subtly scary place. Watch it, and see where Martin Scorsese got some of the ideas for “Taxi Driver.” Street Kings (Fox): Another maverick-cop saga from David Ayer (the writer of “Training Day” and director of “Harsh Times”), this punchy action-drama has Keanu Reeves as Tom Ludlow, a seasoned LAPD officer who copes with the deal of his wife by diving headlong into booze and violence. A chance for redemption comes when an officer is gunned down and Ludlow takes over the investigation, but will his mission guide him towards salvation, or just to more corruption? Reeves may not be the world’s most convincing tough-guy, though the screenplay (credited to James “L.A. Confidential” Ellroy, among others) is hard-hitting, and the supporting cast (which includes Forest Whitaker, Cedric the Entertainer, and Hugh Laurie) fires on all cylinders.
--------------------------------------------------------------- Westover Financial, Inc. Forms New Business Unit and Launches Accompanying Website Westover Financial, Inc. in order to fill a void in middle market commercial lending, has announced the formation of a new business unit. Westover Rental Equipment Finance will focus on the long term, inventory debt financing needs of vendors who sell equipment for rent. It will also provide long term financing for their customers who choose to own the equipment. This unit will be supported by their new website www.westoverrentalequipmentfinance.com Santa Ana, CA -- Westover Financial, Inc., middle-market equipment financing and leasing company, announced the formation of another, niche-specific, equipment financing division, Westover Rental Equipment Finance. This is another in a series of planned business unit additions for 2008. It stems directly from the ongoing success of both Westover Medical Equipment Finance launched in August of 2007, to serve the medical, dental, hospital and other commercial medical users. As well as Westover Hospitality Equipment Finance formed in January 2008, to serve the equipment acquisitions needs of hotels, motels, restaurants and other hospitality related entities. Westover Rental Equipment Finance will fill the pressing need for creative, structured and economical equipment financing solutions sought by a variety of industries. This division will provide equipment financing and leasing solutions to many of the problems encountered in the "equipment for rent" industry. It will be able to access different lenders to accommodate a variety of equipment financing or leasing scenarios, unique to this particular industry. Many of which cannot be accommodated by conventional lenders such as banks. "We are gaining an identity as a knowledgeable, experienced and service oriented niche lender in several industries," said Steve Jones, President of Westover. "Again, we will dedicate necessary, specialized resources to a specific market. We also expect that the current liquidity issues facing banks and other traditional lenders may open up opportunities for us". In conjunction with this, a new company web site, www.westoverrentalequipmentfinance.com has been launched. It was designed to be user friendly for rental equipment customers and rental equipment vendors alike. These vendors include but are not limited to construction, medical, audio-visual and anyone in the business of renting equipment to commercial entities. Westover Financial, Inc., headquartered in Santa Ana, CA was founded in 1984 and has funded over $500,000,000. in equipment purchases. It serves the needs of customers nationwide from the home office as well as branch offices in San Francisco, Tampa, Austin and Los Angeles. From it's web site, www.westoverrentalequipmentfinance.com they are offering a free "Rental Equipment Financing Newsletter" issued quarterly. As well as a free "Insiders Checklist When Financing/Leasing Rental Equipment". This helps owners and decision-makers save time and money when engaging in this process. For more information contact Steve Jones at Westover Financial, Inc 400 N. Tustin Ave. #140 Santa Ana , CA 92705; or 800-982-5868 x104
### Press Release ########################### Another Top Catch for The Alta Group - Jeff Addison Joins Alta’s EMEA Team
The Alta Group, the premier global asset finance consultancy, announced its third top-level CEO addition in as many months with the appointment of Jeff Addison as a Principal in its EMEA Region. Jeff is highly experienced with a strong track record of delivering substantial revenue and income growth in vendor and asset finance. He has significant international experience and has been a leader in various merger and acquisition projects in the UK, continental Europe and the US and in setting up new-start asset finance companies. Jeff has particular expertise in integrating disparate businesses, strategy re-alignment and delivery, restructuring, performance improvement and risk management. With a career-long emphasis on motivating and developing teams, he is also a highly regarded senior-executive coach and mentor. Jeff will concentrate on numerous opportunities primarily across Europe and the UK with particular focus on his decades of experience in vendor leasing. Jeff was appointed CEO and Managing Director of Siemens Financial Services (SFS) Ltd on the merger of Schroder Leasing, a market leader and one of the UK’s most consistently profitable vendor leasing companies - where he had been CEO and MD for more than 10 years - with Siemens Finance UK. He achieved the successful integration of the businesses within tight timescales, rolling out a single systems platform and uniform processes to create a dynamic new force in UK vendor finance; under Jeff’s leadership, the business grew substantially and rapidly, doubling profitability in four years. Jeff was closely involved with introducing best practice models throughout SFS in Europe and the concept of vendor finance for external vendors with notable success in France, Spain, Germany and Scandinavia. He was recently an International Consultant for SFS GMBH where he provided experienced guidance and input to a variety of projects. They included establishing a new vendor finance business in Spain and advising on setting up new businesses in Germany and Scandinavia. Jeff was a key player in M&A projects internationally and advised on restructuring and reorganisations. He was also a non-executive director of several UK and international companies. An industry veteran of over 35 years, Jeff has been an active member of the UK Finance & Leasing Association for many years. He was Chairman of the Technology Group and intimately involved in creating the compliance-based FLA Code of Practice which still provides the basis for industry best practice 15 years later. Jeff continues to be a member of the FLA Business Finance Code Group which is responsible for the industry’s ethical practices. Derek Soper, Chairman of Alta’s EMEA Region, said: “Alta’s mission is to sell ‘experience’ and ‘success’, of which Jeff has both, and we are delighted to welcome him to our rapidly-expanding team. His entrepreneurial approach to M&A challenges, business reorganisation and performance enhancement will be valuable additions to Alta’s armoury at a time when we are seeing increasing demand in these areas.” Alan Leesmith, Managing Principal of Alta’s EMEA Region, added: “Jeff is widely recognised as one of the leading proponents in sales aid and vendor finance with decades of expertise which will be of great benefit to our large vendor client base. His international experience, not only across Europe but also in the US, will be of particular value.” Jeff Addison commented: “I am looking forward to a range of exciting new challenges and the opportunity to contribute to the performance and management of our clients as a member of Alta with its unique, specialist capabilities. We are assessing several business opportunities and I am hugely enthusiastic about engaging with those businesses and helping them to deliver their strategies.” Ends ABOUT THE ALTA GROUP The Alta Group is a niche international consultancy of multi-skilled asset finance professionals with extensive hands-on experience running leasing companies and in all aspects of leasing. Alta’s EMEA Region is celebrating a decade of service in 2008. The Group provides a broad array of strategic consulting and advisory services, interim management, education and training programmes, M&A work and market intelligence services for clients across Europe, North America, Latin America, Australia, China and generally around the world. Alta’s clients include banks, independent lessors of various sizes, manufacturers, captives, vendors and others. For more information, please visit www.thealtagroup.eu.com ### Press Release ###########################
News Briefs---- Regulators close Kansas bank Interest rates on bank CDs rising Sarbanes-Oxley Upheld By Court as Constitutional At the Fed, a Debate Over Countering Inflation Grows Louder Beware of De Lage Landen Taiwan: Leasing business volume up due to tough times ----------------------------------------------------------------
“Gimme that Wine” The Sipping News Wine Prices by vintage ---------------------------------------------------------------- Restaurant Review
Fake eatery earns Wine Spectator award http://two.leasingnews.org/Recommendations/rstrnt.htm ----------------------------------------------------------------
Today's Top Event in History 1944-Paris Liberated: as dawn broke the men of the 2 nd French Armored Division entered Paris, ending the long German occupation of the City of Light. That afternoon General Charles de Gaule led a parade down the Champs Elysees. Though Hitler had ordered the destruction of Paris, German occupying-0fficer General Dietrich von Choltiz, refused that order and instead surrendered to French Major Genral Jacques Le Clerc. [headlines]
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