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Kit Menkin's Leasing News
www.leasingnews.org Wednesday, May, 2002 Accurate,
fair and unbiased news for the equipment Leasing Industry Headlines CIT Al Gamper is a “Straight Shooter.” Fitch Affirms CIT
At 'A-'; Rating Watch At Negative Commercial Money Center Up-Date The Funding Tree Up-Date Trevor-Hocksmith-Hocksmith Form Sterling Financial Group Wednesday--- Odds and Ends Steepest Decline
in Business Loans in 30 Years ### Denotes Press Release ------------------------------------------------------------------------------------------------------- CIT Al Gamper is a “Straight Shooter.” by Christopher Menkin, Leasing News Staff Writer CIT President/C.E.O. Al Gamper told it straight to his employees last Friday, April 25th on the telephone conference call, as we reported in Monday’s Leasing News. However,. the Tuesday front page of the New York Times Business Section gives the impression the exchange of stock between Tyco and CIT after the sale will result in a loss for everyone, except the executives. Here are excerpts from the telephone conference with CIT employees: “When Tyco purchased us last year, all our stock, and stock options, they were converted over to Tyco---are they going to be converted back over to CIT stock and options?” “Good question – my feeling on that is management and employees should be aligned with the company they work for. So we should not have Tyco options if we are CIT people. We should have CIT options. We are going to put in place and we are working on what I feel would be a very fair and good stock option program for the CIT team tied to CIT stock--- OK?” “That’s about the going forward stock. What about existing stock?” “Existing stock?” “And Tyco’s International stock that was converted over to CIT?” “ We will take into consideration all that Tyco stock, the CIT that went to Tyco that goes back to CIT. That’s part of the program that we are looking at so everyone so that everybody has a program that is fair and equitable. That’s part of the process we’re still working on--- but we are going to cover that in the next couple of weeks. We’ll put it all together. I can assure you, as an individual who has more options than anybody, I would be interested in that--- OK?” “Okay.” “Thank you.” “You’re welcome.” A female employee asked: “Under Tyco, we were told we were 100% invested in the company. We are wondering now going back to CIT, we will still be 100% invested in the company?” “ 100% invested in what? “ “ Originally we had to wait five years, under CIT, to become invested in the company for the portion.”. “100% vested in what, your 401K plan? “ “ Yes.” “I think the principles that whatever applied under TICO would apply under us. If you are talking about the 401k plan, are you a new employee? “ “Yes, I have been here about a year now? “ “ I think there is a certain requirement for vesting for the 401K. You have to be with the Company so long a time before you are vested. Whatever you had under the Tyco arrangement we will continue under the CIT arrangement--- OK?” “Okay. Thank you.” “You’re welcome” A male employee asked: “Any news when we get the 1% back into 401K?” “You got me because I don’t remember losing 1% in mine.” “Didn’t they go for six percent down to five percent?” “ I’ll have to look into this, I’ll tell you what--- that’s a good question, you can call the human resources dept, call Susan Mitchell She’ll give you an answer. I don’t recall that happening--- that we changed the company match on this at all. I must have missed it, if it did. But, I don’t recall that. Why don’t’ you give her a call on 740- 5414 and she’ll give you an answer to that--- OK? “Great.” “ Area code 973, don’t tell her I said to call.” Laughter “ I don’t remember your name anyway.” More laughter “Anything else?” “No, thank you.” “You’re welcome.” If your heard the conversation, the tone, the determination, the intonation, if Gamper has anything to do with it, Tyco’s International’s plan to spin off its financing off its financing unit will not cost several thousand employees their stock options. There are several factors affecting this transition for employees. The major dilemma is Tyco’s falling stock.. Tyco’s stock today is at its lowest level in almost five years. Tyco
said in its filing with the S.E.C that CIT workers would forfeit
any unvested options---those that have been promised but that employees
have not yet earned — as soon as the spin-off was completed.
It said they would have up to 90 days to exercise any options that
had already vested. But
because Tyco's stock has fallen so sharply this year, many of the
CIT employees' options are worthless, with an exercise price higher
than Tyco's current stock price. The
best bet is for Tyco stock to recover within 90 days of the CIT actual sale date. There may be several options
available, including borrowing to purchase the stock for the future,
but with possible tax consequences, to pay with cash, or to allow
their options to expire. Gamper says his company is looking into
all the options and at the behest of “all” employees. The
exact number of options that CIT's workers stand to lose is not
known at this time. Tyco did not disclose the figure in the CIT
prospectus, and Brad McGee, a spokesman for Tyco, told the New York
Times he did not know it. "This
is something we're very sensitive to," Mr. McGee said to the
New York Times.. "The goal behind any stock option program
is retention of employees — it's a motivator of employees." Each
of CIT's 5,700 employees will receive some new options in CIT when
the company's offering is complete, Mr. McGee said, although the
number has not yet been determined. Those options will be set at
CIT's offering price and take three years to vest. The
New York Times reported “ top employees of CIT have already
received new options, according to the CIT prospectus. In February,
Tyco gave 545 employees at CIT 1.2 million options to buy Tyco shares
at $23.83 each, just above the lows that Tyco set early that month.
Albert Gamper, CIT's chief executive, received 200,000 of the options,
and four other senior CIT executives were given 50,000 each. “ Those
options will not be canceled when Tyco spins off CIT, according
to the prospectus. Instead they will be converted into CIT options
and continue to vest. The
grant in February was "a retention option grant" intended
to enable Tyco and CIT to keep crucial employees, Mr. McGee said.
Mr. Gamper in his telephone conversation was quite candid with his
employees that he had also a big interest in this event. The
New York Times reported Tyco's decision last week to cancel a breakup
plan the company announced in January has badly damaged the company's
credibility, said Brett Gallagher, head of United States equities
for Bank Julius Baer, which owns about 200,000 Tyco shares. “Now,
even though Tyco's stock appears cheap relative to the company's
earnings, Mr. Gallagher said that he wanted Tyco to spin off CIT
and win an upgrade from bond-rating agencies before he would buy
more shares. “Because
investors are so skeptical, spinning off CIT is ‘going to be
a difficult deal to get done,’ Mr. Gallagher said. “Tyco
said yesterday that Goldman, Sachs and Lehman
Brothers would be the lead underwriters on the CIT offering.” The
reality is a lot more complicated than any prediction. It is dependent on the perception of the stock
buyers about the company, its employees, as well as management. They have a very high espirit des corp, a growing,
solid position in their marketplace, and to sum it up, know what
they are doing. It will
be up to Gamper and his staff to barnstorm the country as if he
were running for president of the United Sates, but perhaps more
difficult. He will not only
have to get them to vote for him, but to take money out of their
family budget to invest in CIT. Gamper
appears to be a straight shooter. I bet CIT rises again as its own
company under he and his staff’s leadership. (Another
viewpoint, Gamper is trying to save his employees their jobs. In this “wobbly” economy, there are
many unemployed people in the bank, finance, and leasing community.
The Leasing Industry should be supporting the CIT IPO. editor ) ###
############################## ######################### Fitch Affirms CIT At 'A-'; Rating Watch At Negative Fitch
Ratings affirms CIT Group's and related entities' 'A-' senior debt,
'BBB+' subordinated debt, 'BBB+' preferred stock, and 'F2' commercial
paper ratings, respectively. The Rating Watch status on all of the
company's ratings is revised to Negative from Evolving. Approximately
$26 billion of securities are covered by Fitch's actions. ####
#################################### ######################
Wobbly
Economy---Wariness weight on index by
Hope Yen, Associated Press NEW
YORK – Consumer confidence fell in April from a seven-month
high, hurt by anxiety about unemployment and rising energy prices,
suggesting wavering optimism about the economy in the months ahead.
The
New York-based Conference Board said yesterday that its Consumer
Confidence Index fell to 108.8 this month from a revised 110.7 in
March. Still, April's reading beat analysts' expectations of 107.5.
"It's
a bit disappointing with the decline, but confidence still remains
quite a bit better than late last year," said Gary Thayer,
chief economist at A.G. Edwards & Sons Inc. "Consumer confidence
seems to be in a holding pattern right now." The
industry group's index, based on a monthly survey of some 5,000
U.S. households, is closely watched because consumer confidence
drives consumer spending, which accounts for about two-thirds of
the nation's economic activity. Oscar
Gonzalez, economist at John Hancock Financial Services, said consumers
remain wary even though the economy appears to have turned a corner.
"Volatility
in the Middle East, relatively high debt loads, a stock market gasping
for air and a job market that isn't improving quickly aren't stopping
consumers, but these factors are weighing on them," he said.
On
Wall Street, key stock indexes moved higher on the news. The
Dow Jones industrial average closed up 126.35, or 1.3 percent, at
9,946.22, after rising as much as 186 earlier in the session. It
was the Dow's first triple-digit gain in two weeks, but failed to
propel the average back above 10,000. This is the third straight
session the blue chips have spent below the psychologically important
level. Broader
stock indicators also moved higher. The technology-focused Nasdaq
composite index gained 31.30, or 1.9 percent, at 1,688.23, while
the Standard & Poor's 500 index climbed 11.47, or 1.1 percent,
to 1,076.92. Some
buying had been expected after weeks of losses on mediocre earnings
reports and cautious-to-pessimistic forecasts. Investors, who had
hoped for firm signs a turnaround was under way, spent most of the
month selling stocks and avoiding new commitments. As a result,
the Dow dropped to levels not seen since mid-February, while the
Nasdaq and S&P fell back to their late October ranges. Despite
April's dip in confidence, many economists believe that strong consumer
spending will continue bolstering the economy for the next several
months. "We
have recently been reminded that oil price increases can have an
effect on the economy, but the consensus is that all but the most
severe shocks – which we have not yet seen – would not
be large enough to derail activity," said Richard Clarida,
the Treasury Department's assistant secretary for economic policy,
on Tuesday. In
its report, the Conference Board said consumers' assessment of business
conditions eased slightly. Those rating conditions as good declined
to 19.7 percent from 21.0 percent in March. Consumers who believe
business conditions were bad rose to 19.4 percent from 18.3 percent.
Regarding
prospects for the next six months, consumers were mixed. Those expecting
an improvement in business conditions increased to 26.1 percent
from 25.4 percent, while consumers expecting conditions to worsen
also rose, to 6.4 percent from 6.2 percent in March. ----------------------------------------------------------------------------------------------- Commercial
Money Center Up-Date The
Las Vegas, Nevada office is open.
Telephone calls, faxes, and questions are reportedly not
being returned, unless you are an attorney. There are at least six
major lawsuits, plus one, perhaps two counter-suits, going on. Vendors
have not been paid, broker commission not paid, advance rental checks
not returned, alleged unwarranted
liens not released, payments not made on many leases, disputes that
payments were made, and to sum it up: it is worse than a mess.
In the army we had a expression for this, but cannot print
in the family news. The last three word abbreviations are b.a.r. To
top this off, the San Diego regional office of the Federal Bureau
of Investigation has also opened a case.
Leasing News has been asked not to report anything else at
this time. The
Funding Tree Up-Date Leasing
News is still receiving complaints about advance rentals for leases
not funded by The Funding Tree, Riverside, California. The
complaints have asked us not to use their name Typical is: “Please
do not quote me at this time, My customer has asked me to not make
any waves at this time as they are still trying to get their money
back from the funding tree. They are worried that if anything is
put on your site & the funding tree reads it they won't send
the advance rental back.” ####
######################## ############################# Trevor-Hocksmith-Hocksmith
Form Sterling Financial Group To
all of you who we have enjoyed doing business with over the years
and for the new relationships we hope to achieve in the future,
Wayne Trevor, Jay Hockensmith and Chris Hockensmith take great pleasure
in announcing the formation of a new leasing company STERLING
FINANCIAL GROUP, LLC (SFG). Due
to consolidation and closing of GE Capital-Colonial Pacific Leasing
Corporation Portland, OR, the now ex-long term members of the core
management staff have joined forces.
Wayne Trevor: 16 years of commercial lending and leasing underwriting experience.
The last 12 years have been with Colonial Pacific Leasing.
Most recent position was Credit Supervisor for GE Capital-Colonial
Pacific Leasing. Wayne is in charge of all finance and credit operations
for Sterling Financial Group. Jay Hockensmith: 15 years of equipment appraisal
and remarketing sales experience for Colonial Pacific Leasing along
with 10 years previous credit and collection management background.
Jay was the previous manager of Remarketing Operations for GE Capital-
Colonial Pacific Leasing. For the past 2-1/2 years Jay has operated
REMCO, his own equipment appraisal, remarketing and brokering company.
Jay is in charge of sales and marketing. Chris Hockensmith: 20 years of commercial lease
documentation experience with Colonial Pacific Leasing. Chris has
experienced many years of growth through change of Colonials’
ownership from Roseburg Lumber to Pitney Bowes and the later GE
Capital. Chris held the most recent position of Commercial Documentation
Supervisor. Chris is in charge of documentation and customer service
for Sterling Financial Group. This team consists of highly experienced and committed individuals with over 50 years of combined lease underwriting and management skills. The people at Sterling will continue to provide only top level leasing services and industry leadership to the broker, vendor and lessee community. ► SFG offers a full range of small to mid ticket leasing
services to lessees, vendors and
brokers. ► SFG offers separate; credit packaging services, full
documentation services, equipment appraisal and remarketing services
to lessors, brokers and vendors. Taking
leasing to the next level, our leasing team has constructed the
most advanced leasing services and programs offered in the market,
delivered with the highest level of customer service in the industry.
SFG
is “Committed to Excellence
in Leasing”. Integrity is very important to us. Our foundation
is built on very high professional standards, ethics, values and
long term relationships. We look forward to serving the leasing
community for many years to come. We
are now open and accepting business. We invite you to contact us
so we can answer any questions or assist regarding sending your
lease transactions through SFG’s leasing services. Thank-you, STERLING FINANCIAL GROUP, LLC ___________________________________________________ Jay Hockensmith Wayne Trevor Chris Hockensmith VP
Sales and Marketing
VP Finance
VP Documentation and Customer Service 503-829-5284 503-656-9575
503-829-8732 503-829-8752
Fax 503-656-0746
Fax 503-829-8752
Fax ####
############################### ############################## Wednesday---
Odds and Ends Leasing
News will become an afternoon edition today, perhaps Thursday and
Friday, due to technical difficulties. We hope to have this solved
by Friday, including posting on the web site. Hackers got us again. ----- BancPartners BancPartners
laid off 7 employees yesterday.
A couple of these were told they were on the "short
list". Larry Matthews, President of the company is
supposedly leaving within a month. Please
don't use my name.............. (This
comes from a reliable source. Larry
Matthews does not return telephone calls from Leasing News, so we
are unable to obtain a confirmation or denial. We understand the
Lewisville, Texas operation may be closing, and don’t know
if this “lead” pertains to this. Jim Lahti has started
Affiliated Corporate Services (http://www.acsitx.com) and has left
Bancpartners. We do not know the status of Rick Gatelli, his former
“partner.” editor ) ---- Christensen
Joins Allco Enterprises Just
want to chime in that I've known Brad Christensen since the mid
80's, when he was with PacifiCorp. He is a conscientious buyer who
neither wastes your time pursuing deals that ultimately won't get
done, nor passes up opportunities where he sees a good chance of
completing a transaction. It's
good to have Brad back on the West Coast and back in the leasing industry. James
A. Kamradt Senior
Vice President ATEL
Capital Group tel.
415.616.3413 JKamradt@ATEL.co fax.415.989.3796 --- THANK
YOU so much for your service, wisdom, education. Perhaps especially
valuable for those of us in smaller markets (ourselves in NEW MEXICO), the views of you and your contributors bring perspectives
that help us bring value to our clients and underwriters. THANK
YOU! ActiveLsng@aol.com WARREN
ROWE and TERRY MAHER CEF
FINANCIAL SERVICES (505) 291-8801 Founded
1981, still much to learn! --- please
put this in your newsletter and add Stan Evans to our contact list. First, here is his complete contact info.
Then, the News, in quotes. Stanley
A. Evans, Jr.-- Legal Talent Specialist Legal
Solutions--Executive Solutions for Leasing and Finance Inc. 621
Baywood Drive Newport Beach,
CA 92660 949-640-5272 Fax 949-640-8272 stanevans@exsolutions.com "
Teri Gerson, President of Executive Solutions for Leasing and Finance, Inc.,
is proud to introduce Legal Solutions.
Legal Solutions will be managed
by Stanley A. Evans, Jr. and will specialize in providing Legal Talent
to leasing and finance companies as well as private practice law firms. Mr. Evans enjoyed an extensive career spanning
30 years in the leasing
industry, until he transitioned to Executive Search in 1999. Mr. Evans
may be reached at 949-640-5272 or stanevans@exsolutions.com. The corporate
office contact information is Executive Solutions for Leasing and Finance,
Inc. 1141
Minisink Way, Westfield,
NJ 07090-3726
908.654.1550 Fax 908.654.1553 terigerson@exsolutions.com http://www.exsolutions.com." Teri Teri
Gerson, President Executive
Solutions for Leasing and Finance, Inc. 1141
Minisink Way Westfield,
NJ 07090-3726 908.654.1550 Fax 908.654.1553 terigerson@exsolutions.com http://www.exsolutions.com Steepest Decline in Business Loans in 30 Years By
George Stein, Bloomberg
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