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Emily Fitzpatrick---Career Crossroad
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Wednesday, July 6, 2011
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Where in the World is Loni Lowder of ACC Capital?
Reportedly ACC Capital, Salt Lake City, Utah is in a form of receivership, with the bank collecting payments, residuals, and any other income to pay off debts. This was the word Loni Lowder used in an interview regarding the Genesis complaint on not being paid their residual. He said there were more liabilities than assets and doubted that there would be any assets left, and even all those with claims, may not be paid. He said the banks were acting as "creditors" and I asked him if this was like receivership where the banks collect the money, and he said, "Yes, that describes it." Today he says it is not a bankruptcy receivership and the word is not a good description. He also says today about ACC Capital, “I expect all debts to be paid.”
ACC Capital Corporation, Salt Lake City, Utah, where he says today he is 100% the owner, does have a long history of principals and name changes, including Sudhir Amembal, was originally founded by Loni Lowder as PFC Group, 1979. (1) Although the former staff now is working as Stalwart Contract Finance, Lowder said he was the manager of ACC Contract Finance, and changed the name to Stalwart Contract Finance. The Utah Department of Corporation shows he is the manager of ACC Contract Finance, but not the manager of Stalwart Contract Finance, although the web site shows he is the manager, but the point is he is not a principal and therefore Stalwart is a member of the National Association of Equipment Leasing Brokers. (2)
Stalwart Contract Finance, LLC
“Minimum Deal Size $1 million…
“Transaction must include both service and equipment:” Stalwart’s specialty is to fund Service/Product providers who have or are negotiating contracts with investment grade and near investment grade end users of those services. This will enable you to acquire the maximum cash from contracts now, including service and equipment."
Kim Simmons is the contact through the National Association of Equipment Leasing Brokers
Gary Judd is Senior Leasing Officer
Loni Lowder is the manager, but not a principal in the company.
Brenda Gomez is director and Lisa Salie is director Intermediary Relations
According to the Utah Department of Corporation, the principal is Anayensi Perez Almanza, Kearns, Utah, registered 3/22/2010
(1) 25 Year Anniversary
(2) Utah Department of Corporation Registration
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Companies who notify lessee in advance of lease expiration
Commercial National Bank
A -Accepts Broker Business | B -Requires Broker be Licensed | C -Sub-Broker Program
"We do offer discounting as well as brokered transactions, and we have approved some Lessor documents for discount. But if we aren’t willing to accept a Lessor’s specific Lease or EFA documents we have a complete set of own “generic” documents they can use. However; our documents do not have any Evergreen, Wintergreen or any other form of renewal or extension provision language."
"Whoever discounts to us either has it in their document or gives us a written statement that they inform lessee in advance about the end of their contract, and don't abuse Evergreen clause."
“Real Margin or Mark Up”
I am always amused when I attend credit committee meetings and listen to discussions of rate requirements ---especially before the approval of the lease transactions. Many do not understand that the rate under which as lease transaction is booked is just an approximation of the actual rate received. One of the most important statistics a manager of a leasing operation should obtain is a review of a lease that has terminated to determine how close they were to the rate booked. If you haven’t done this is a while, let me suggest it is easier to do than you think.
Modern accounting programs with accrual accounting level out the return and take income in on a defined schedule; however, the actual cash on cash return can be very different. To determine the actual return you should get a print out of the dates actual payments were paid and the amount of the payment. Don’t forget interim rent. Also, remember that payments sometimes include late charges, sales tax, property tax or other fees, from time to time. So you need to be able to account for disbursements as well as payments. You may want to put the late charges aside and other fees as “extra income” or include them.
In addition, at the termination of the lease, if a purchase option was offered: when was it received or how much was the extended rent and when was it received. Then place these payments into a modern pricing program such as super trump to determine the actual return.
We always assume the residual will be received on the last day of the lease---this almost never happens! Extended rent or purchase options that are financed add income that is rarely captured in the lease statistics. This places importance on creating a termination report monthly to determine how much additional income was received on each lease. Occasionally, a purchase option that is financed or an extended rental can add a large amount of income that increases the income for the leasing activities but is rarely recognized.
One statistic that is of interest to large funders is the sales tax charged to the lessee because this amount is held after it is paid until it is remitted to the State. If a funder has a fifty million dollar portfolio with an average age of 48 months, it could have as much as $1,500,000 in payments each month which with a 6% average sales tax would yield $90,000 to hold until remittance to the State. In some States, this is paid every three months creating a large float that has value. On occasion we lose money by paying property tax prior to collecting from the lessee.
Perhaps you can see now that the actual return on a lease is dependent on a large number of cash flows that affect it over the term. In addition lessor’s accept certain risks like failing to add a provision in the lease that allows the Lessor to adjust the lease payments to maintain yield requirements for changes in the Federal and State corporate income tax percentages when the tax is collectex monthly.
Perhaps more important, corporate tax rate changes improve income when they are lowered and hurt income when they are increased. Which do you think will happen in the next five years?
We inserted Non-Cancelable clauses in our leases in the 1980’s to protect our income when rates were very volatile. To improve our margins we borrowed large sums of money independent of each transaction, putting us at risk for early payoffs that wanted to refinance at lower rates. It was a safety margin that went astray as it became a weapon to charge customers the remaining payments as early termination fees. However it certainly added to the profitability of the leasing activities.
I am sure you will be surprised how the actual return varies both up and down from the assumed booked rate. With the current software programs available, there is a lot that can be learned.
Remember, this procedure is not intended to change what you are presently doing, or maybe it will, but its main purpose is to show you how leasing is different from lending and gives you a better insight on how to think about margins.
Mr. Terry Winders, CLP, has been a teacher, consultant, expert witness for the leasing industry for thirty-five years and can be reached at firstname.lastname@example.org or 502-649-0448
He invites your questions and queries.
Previous #102 Columns:
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Top Stories---June 27--June 30
Here are the top ten stories opened by readers:
(1) Five Point Capital, San Diego, California
(2) Final---Five Point Capital, San Diego, California
(3) Put a Clause Requiring Notification in Your Lease Contract
(4) Kelly Reale, vice-president, Key Equipment Finance
(5) Emily Fitzpatrick---Career Crossroad
(6) Leasing 102 by Mr. Terry Winders, CLP
(7) Operation Lease Fleece---Update
(8) New Hires--Promotions
(9) Ex-Citigroup executive charged with embezzling more than $19MM
(Tie) (10) Bank Beat---48 Banks Closed First Part of 2011
(Tie) (10) Lender proves to be a costly buy for Bank of America
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