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The Year in Review/Capital Markets Issue  
Topics covered by industry insiders range from Debt Market Outlook, The ACA's Healthcare Impact on Lenders and more. 

 


 


FEATURE STORIES
Predictions for a Mature Market
Key players in the capital markets provide readers with an overview of the past year as well as a look ahead to 2017. By Myra Thomas. READ MORE

Clubbed and Sole Lender Financings Gain Momentum in ABL Space; Syndicated Issuance Dips in 2016
Maria Dikeos of Thomson Reuters LPC provides readers with an update on the capital markets. By Maria Dikeos READ MORE
Debt Market Outlook for 2017
Two Skadden attorneys reveal what lenders should look out for in 2017. By Seth Jacobson and Darrin Halcomb. READ MORE
The ACA’s Impact on Healthcare Lenders
The ACA has changed how healthcare providers must manage their working capital to be successful. In this article we learn what has had the greatest impact on them, as well as the need for lenders to continue to adapt to upcoming ACA changes under the incoming administration. By Jennifer Sheasgreen and Zachary Reed. READ MORE  
Borrowers Speak Out
Ever wonder what advice borrowers would give to lenders? Or why they chose the lenders they did? In this interview, The Secured Lender’s editor-in-chief discusses those questions, and more, with Rick Lonson, CFO of Factory Motor Parts (FMP), and Joe Vaccarello, CFO of Maxim Crane Works L.P. By Michele Ocejo. READ MORE 



Recapture CFA's 40 Under 40 Awards: The Start of a New Annual Tradition & Supporting the CFA Education Foundation
 

 


TSL DEPARTMENTS
Letter From

Bob Trojan, CEO of the Commercial Finance Association, discusses how CFA can help you meet your 2017 goals. READ MORE


Collateral

The latest issues affecting the ABL and factoring industries, including company news and personnel announcements. READ MORE


TSL Profile

Yvonne Kizner, senior vice president at Blue Hills Bank Asset-Based Lending Group, and Keith Broyles, senior vice president, head of Asset-Based Lending, discuss starting up Blue Hills Bank’s first ABL group. By Eileen Wubbe READ MORE


What Would You Do?

In this edition of What Would You Do?, the Chief Credit Officer of Overadvance Bank learns that one of the Bank’s borrowers has several hundred thousand dollars in state tax liens fi led against it in various states for past due sales taxes, and owes another $2 million in sales taxes for which a lien has not yet been filed. The borrower is tight on availability and tries to persuade the Bank not to implement reserves for the unpaid sales taxes. By Dan Fiorillo and Jim Cretella. READ MORE  


The CFA Brief

Among CFA Members
CFA Chapter News
CFA Calendar


Legal Notes

The past year produced a number of important legislative and judicial developments affecting secured lending. In this issue, CFA’s co-general counsel have selected and summarized certain of the most interesting legislation and cases previously reported on in The Secured Lender. By Jonathan Helfat and Richard Kohn, CFA Co-General Counsel. READ MORE 


Revolver
Joe Accardi of Santander discusses the future of professional jobs and the importance of lifelong learning and adaptability. READ MORE 
TSL TRENDING STORY
Clubbed and Sole Lender Financings Gain; Momentum in ABL Space; Syndicated Issuance Dips in 2016
By Maria Dikeos

Maria Dikeos of Thomson Reuters LPC provides readers with an update on the capital markets. 2016 has been an unusual year. The capital markets have observed fluctuating levels of volatility, uncertainty and slowdown driven in large part by headline risk, a shifting political landscape and a smattering of less clearly defined economic jitters.


 

PAST TSL ISSUES
TSL INTERVIEW
Andrea Petro: CFA's New President Placed Emphasis On Engaging The Next Generation

By Michele Ocejo

CFA’s new president, Andrea Petro, is the executive vice president and division manager of the Lender Finance division of Wells Fargo Capital Finance, based in Dallas, TX. With over 30 years of experience in asset-based lending, Andrea established the Lender Finance division in 2000, with the exclusive mission of providing financing for specialty finance companies. Her success with the Lender Finance division led to the expansion of her role and the formation of the Resort Finance and Supply Chain Finance unitsRead More


Preparing for Big Changes in the Small-Business Lending Market

By Tim Atkinson

As new technology sweeps into the small business lending market, we hear how CFA members are adapting new technology to position themselves for future success. Read More


The Honorable Sheila C. Bair: From the Glass Ceiling to Glass-Steagall
By Michele Ocejo

Sheila C. Bair served as the 19th Chairman of the Federal Deposit Insurance Corporation for a five-year term, from June 2006 through July 2011. Since leaving the FDIC, Chairman Bair has continued her work on financial policy issues as a Senior Advisor to the Pew Charitable Trusts. On August 1 she transitioned from her position at Pew to become the President of Washington College in Chestertown, MD. Bair will be the luncheon speaker during CFA’s Annual Convention in Austin on November 12. Read More

 

 

What Asset-Based Lenders ShouldKnow About Using IP as Collateral
By David Peress and Gabe Fried

In the discussion that follows, executives fromHilco Streambank focus on the characteristicsof intellectual property most often used ascollateral, consider the steps that lenders shouldtake to preserve asset values when a borrower isdistressed, and examine available strategies ina recovery transaction. They also include a fewrecent examples of intellectual property sales bycompanies whose intellectual property had beenused to secure an asset-based loan. Read More

INSIGHTS FROM A MIDDLE-MARKET ASSET-BASED LENDER
By Doug Vitek

Doug Vitek of Associated Bank offers his point of view on the middle marketRead More



PREDICTIONS FOR INTERCREDITOR ARRANGEMENTS IN 2015
AND BEYOND – THE DEVIL REALLY IS IN THE DETAILS

By Katherine E. Bell, Jennifer B. Hildebrandt and Jennifer S. Yount

Intercreditor arrangements are one of the most challenging aspects of transactions, yet they have become increasingly prevalent in recent years. Changes in law, the regulatory environment, the credit markets, the economy, and the way that companies do business can all trigger new developments in intercreditor arrangements.  This article examines five areas where we anticipate developments of intercreditor arrangements in 2015 and beyond and describes the reasons for the developments. Read More




EVERYTHING YOU NEED TO KNOW RIGHT NOW ABOUT SUPPLY CHAIN FINANCE
By Lionel Taylor and Igor Zax

What is the actual definition of supply chain finance? What are the barriers to its widespread usage? What trends are currently affecting supply chain finance? The answers to these questions and more are answered. Read More



TRADE CREDIT INSURANCE PROVES TO BE A USEFUL FINANCIAL TOOL
By Eileen Wubbe

With exports increasing, trade credit insurance use is also on the rise as banks and borrowers use it to enhance loans and drive sales growth. Insurers and lenders discuss the evolution of trade credit insurance, its benefits and overcoming misconceptions. Read More


TSL INTERVIEW SERIES: INTERVIEW WITH GENERAL MICHAEL HAYDEN, RET.

CFA/TSL Lunch Series: Interview with General Michael Hayden, Ret.

At the Center of Central Intelligence. General Michael Hayden became director of CIA in May of 2006, capping a career in service to the United States that included nearly 40 years in the Air Force. He served until 2009. From 2005-2006, General Hayden was the country's first principal deputy director of national intelligence and the highest-ranking military intelligence officer in the country.

From 1999-2005, Hayden had served as the director of the National Security Agency (NSA) and chief of the Central Security Service (CSS) after being appointed by President Bill Clinton. He worked to put a human face on the famously secretive agency, explaining to the American people the role of the NSA and making it more visible on the national scene.


BANKRUPTCY REFORM COMMISSION PROPOSES FUNDAMENTAL CHANGES TO RIGHTS OF SECURED LENDERS IN CHAPTER 11 CASES
By Brian Cove

A bankruptcy trade group has issued wide-ranging recommendations to Chapter 11 of the Bankruptcy Code that could erode the rights of secured lenders, if enacted. This article provides an overview of the proposals that are the greatest cause of concern for the commercial finance industry.  Read More


Merchant Cash Advance: Friend or Foe?
By Gina Mackenzie and Donna Hinrichs

Interested in partnering with an MCA, but need advice on how to pick the right partner for you? Look no further. Two executives from RapidAdvance explain what to look for in an MCA partner. Read More


The TSL Interview: Coaching Up the CFA - A Conversation with Pat Trammell, CFA’s New President
By Michele Ocejo

CFA’s new president, Patrick Trammell, is the founder and president of Southeastern Commercial Finance, LLC. In this extensive conversation, he discusses his history with CFA, his perspectives on CFA and the industry, his priorities as CFA president and why he believes CFA’s best days are ahead. Read More

 

 

Changing the Risk Analysis: Eleventh Circuit IssuesOpinion Supporting Non-Debtor Releases in Chapter 11 Plans
By Ron C. Bingham, II and Daniel J. Ferretti

The Eleventh Circuit Court of Appeals, which presides over appeals fromfederal courts in Alabama, Florida, and Georgia, recently approved ofnon-debtor releases in Chapter 11 bankruptcy plans. The decision sets outa test for bankruptcy courts to use when reviewing release provisions.This article discusses the case’s relevance and steps lenders can take tomitigate its effect. Read More

BORROWERS AS DISTRIBUTORS OF TRADEMARKED INVENTORY: SUGGESTIONS FOR THE ASSET-BASED LENDER
By Anthony Cianciotti

Distributors of inventory frequently sell products bearing a third party’s trademark. Trademark law and the distributor’s agreement with the trademark owner may limit the sale of trademarked inventory after termination of the distribution agreement. An asset-based lender should understand both when considering financing trademarked inventory. Read More



TSL INTERVIEW
A CONVERSATION WITH KAH CHYE TAN 
By Michele Ocejo

Kah Chye Tan is chair of ICC Banking Commission. The Commission is part of International Chamber of Commerce headquartered in Paris. Tan was appointed to this position in 2011 to lead the development of the Commission’s policy and standard developments initiatives. Major initiatives launched in the last three years included the establishment of the ICC Trade Finance Register, which has helped policy makers to improve the regulatory capital framework for trade finance.

Tan is also a managing director of JPM Chase, London. He joined JPM London in 2013 to drive the bank’s capital management and securitization initiative in trade finance and loans products. Prior to this, Tan had worked for various global banks. More recently, he was vice chairman of Barclays Corporate Banking, London and Global Head of Corporate Cash and Trade for Standard Chartered Bank, Singapore. Read More



IS CHINA’S LEGAL REFORM GOOD FOR BUSINESS AND INVOICE FACTORING?
By Stephen M. Perl

An expert in the region offers insight into the legal environment and new registry system in China for factoring. Read More


TSL INTERVIEW
ISABEL FERNANDEZ: CHIEF COMMERCIAL OFFICER AT GE CAPITAL, AMERICAS
By Michele Ocejo

In April 2014, Isabel Fernandez became the chief commercial officer at GE Capital, Americas, one of the largest providers of commercial loans and leases to mid-market companies throughout the Americas. In this interview, she discusses her priorities as chief commercial officer, her theory on managing diverse groups and her advice to women entering the industry. Read More

TSL EXPRESS TOP STORY
Citizens Bank Provides $20 Million Credit Facility to Luxury Jewelry Firm David Webb, LLC
Citizens Bank announced that Citizens Commercial Banking is providing a $20 million revolving credit facility to David Webb, LLC. Citizens is the sole lender and administrative agent.
 
Established in 1948, David Webb is a premier jewelry brand whose namesake founder / designer redefined luxury jewelry. The company has a highly selective distribution strategy that includes boutique locations in New York City and Beverly Hills, Calif., select luxury retailers and international trunk shows
 
A new Citizens client, David Webb will use the funds for new store growth, working capital and general corporate purposes.
 
“We have really benefited from our partnership with the team at Citizens,” said Mark Emanuel, co-owner and CEO of David Webb, LLC. “This is our first asset-based credit facility and they were able to bring great ideas to the table and execute the transaction quickly and seamlessly.”
 
“David Webb is a great new client and we’re very happy to help them achieve their strategic and financial goals,” said Chris Carmosino, president of Business Capital at Citizens Bank. “Providing asset-based lending revolving credit facilities is just one of the ways that Citizens delivers value for clients at every stage of their business life cycle.”
 
Citizens aims to be a go-to strategic and financial partner by offering unrivaled industry expertise, great ideas and seamless deal execution. The Citizens Commercial Banking approach puts clients first, and offers solutions that help clients make the best decisions throughout the life cycle of their business.
 
Citizens Financial Group, Inc. is one of the nation’s oldest and largest financial institutions, with $149.5 billion in assets as of December 31, 2016. Headquartered in Providence, Rhode Island, Citizens offers a broad range of retail and commercial banking products and services to individuals, small businesses, middle-market companies, large corporations and institutions. In Consumer Banking, Citizens helps its retail customers “bank better” with mobile and online banking, a 24/7 customer contact center and the convenience of approximately 3,200 ATMs and approximately 1,200 Citizens Bank branches in 11 states in the New England, Mid-Atlantic and Midwest regions. Citizens also provides wealth management, mortgage lending, auto lending, student lending and commercial banking services in select markets nationwide. In Commercial Banking, Citizens offers corporate, institutional and not-for-profit clients a full range of wholesale banking products and services including lending and deposits, capital markets, treasury services, foreign exchange and interest hedging, leasing and asset finance, specialty finance and trade finance.
 
Citizens operates through its subsidiaries Citizens Bank, N.A., and Citizens Bank of Pennsylvania as Citizens Bank, Citizens Commercial Banking and Citizens One. www.citizensbank.com



TSL EXPRESS INDUSTRY HEADLINES
Optima Specialty Steel, Inc. Receives Court Approval to Access $40 Million Under New Credit Facility
Optima Specialty Steel, Inc. announced that it received approval from the United States Bankruptcy Court for the District of Delaware to enter into an immediate credit facility providing up to $40 million of new immediate borrowing capacity. READ MORE
     

iTeknik Holding Corporation Secures $15 million Institutional Credit Facility to be Utilized for Acquisitions
iTeknik Holding Corporation (OTC PINK: ITKH) announced that on December 30th, 2016 it had secured a $15 million dollar credit facility from institutional lender, TCA Global Master Credit Fund, LP to be used primarily for making acquisitions.

TCA Global Master Credit Fund, L.P. and iTeknik Holding Corporation agreed to terms and closed on the $15 million facility on the last business day of the year, December 30, 2016. The facility is for 20 months and will provide multiple advances as requested and approved for individual or multiple acquisitions. READ MORE
Empire Resorts, Inc. and Montreign Operating Company, LLC Announce the Closing of $500 Million First Lien Credit Facilities
Empire Resorts, Inc. (NYNY) (“Empire” and, together with its subsidiaries, the “Company”) (the “Closing Date”) announced the successful closing of its senior secured first lien term loan facility and senior secured revolving credit facility. The financing provides an aggregate of $485 million senior secured first lien term loans, consisting of $70 million of Term A loan commitments and $415 million of Term B loan commitments, and a $15 million senior secured revolving credit facility. The Term A term loan and the revolving credit facility have a maturity date of January 24, 2022 and the Term B term loan has a maturity date of January 24, 2023. READ MORE 
Willdan Announces Expanded Credit Facility
Willdan Group, Inc. (NASDAQ: WLDN), a provider of professional technical and consulting services, announced that it has entered into an Amended and Restated Credit Agreement with BMO Harris Bank, N.A. that expands the Company’s available borrowing capacity. The new credit agreement consists of a $35.0 million, three-year revolving line of credit. READ MORE 
Why Sports Authority’s Bankruptcy Isn’t Done Wreaking Havoc on the Industry Yet
It’s been nearly a year since former sporting goods heavy hitter Sports Authority filed for Chapter 11, but it’s impact on the industry remains palpable. Canaccord Genuity Inc. analyst Camilo Lyon said Monday that disruption stemming from the sporting goods bankruptcies — Sport Chalet, Bob’s Stores and Eastern Mountain Sports owner Vestis Retail Group LLC also filed for Chapter 11 last year — is dragging on much longer than anticipated. READ MORE 
Directed Capital Closes Seventh Fund at $77 Million with Increased Goldman Sachs Revolving Credit Facility of $100 Million
Directed Capital, a national distressed asset workout specialist firm that opportunistically acquires, manages, and resolves distressed commercial mortgage loans in the $1 million to $10 million range, announced the closing of its seventh fund at $77 million, its highest-grossing fund to date. Additionally, the firm has announced a $40 million increase in the firm’s revolving credit facility from Goldman Sachs Bank USA from $60 million to $100 million. The fund already has acquired more than $180 million in assets, and quarterly distributions to investors began in the first quarter of 2016. READ MORE

 


INDUSTRY MOVES 
Super G Funding Hires Senior Executive Eric Von Stafford to Expand Cash Flow Lending Group
Super G Funding, LLC, a leading national provider of residual and cash flow-based loans to lower middle market businesses, is pleased to announce the hiring of Eric Von Stafford. Based in San Francisco, Stafford is joining Super G to help scale the growing cash flow lending division with a specific focus on continuing to build strong partnerships with small-to-medium investment banks and business brokers nationally.

Stafford has been a senior investment professional in the direct private debt market for over 10 years. Prior to joining Super G, he held the role of managing director at multi-billion lending funds including White Oak Global Advisors and Medley Capital where he originated and underwrote over $300 million in senior secured and subordinated loans. Prior to his direct lending experience, Stafford was a vice president at Montgomery Securities (convertible debt division) and Goldman Sachs (high yield bond division). Stafford earned a B.A. from Georgetown University and an MBA from the Booth School of Business at the University of Chicago.

“Eric will help us grow our core second lien stretch piece business as well as special situation business and bring new relationships given his ties to the investment banking and deal sourcing community throughout the country,” said Charlie Perer, head of originations for Super G’s Cash Flow Lending division. “I am very excited to join Super G with the goal of building out a national network of mid-market investment banks and creating awareness for sub $5 million, non-dilutive subordinated capital,” said Stafford.

Super G Funding is an alternative lender specializing in residual and cash flow loans. Super G’s mission is to fill the credit void in the lower middle market by providing non-dilutive, senior and subordinated debt solutions to businesses in need of financing for working capital, growth capital, acquisition capital, or special situation financing. Super G’s second lien product is complementary to senior lenders and is structured to fund the financing gap (airball/stretch piece)—the portion of a loan that exceeds the amount supported by the underlying collateral and is dependent on support from the company’s cash flow or enterprise value.

Super G lends up to $5 mm per transaction in the form of a fully-amortizing cash flow term loan with a 6-36 month term (pricing contingent on credit profile). Super G is a small, but nimble team, highly responsive, and can close deals rapidly. www.supergfunding.com

 


COMPANY NEWS 
US Capital Partners Advises on $7 Million Project Financing for La Quinta Inns & Suites Development
US Capital Partners Inc.has advised on well-structured, custom project financing of $7 million for the construction of a La Quinta Inns & Suites hotel in Lodi, San Joaquin County, California. The 40,000 square foot, 76-room hotel will be located at 1136 S. Cherokee Lane in Lodi, a city well-known for being a center of wine grape production.

Headquartered in San Francisco, US Capital Partners is a full-service private investment bank that makes direct debt investments, participates in debt facilities, and has wide distribution for debt and equity private placements. The firm has a history of successful closings in the commercial and residential real estate sectors.

Yogesh Patel, principal at Lodi Vineyards Hospitality, LLC, the developer for the project, said: “We’ve appreciated the creative financing solutions and attention to detail US Capital Partners has delivered while advising us on the development of our project and providing financing options.”

“We are extremely pleased to have advised on this $7 million project financing for a landmark La Quinta Inns & Suites hotel development in Lodi,” said Jeffrey Sweeney, Chairman and CEO at US Capital Partners. “The developer approached our firm for help in securing suitable construction financing and to better understand the various options available to the firm. US Capital Partners provided intelligently structured financing, while successfully increasing the loan-to-value ratio for the project.”

Founded in 1968, La Quinta Inns & Suites is a chain of hotels in the United States, Canada, Mexico, and Honduras. Shares in the company are listed on the New York Stock Exchange under the symbol LQ. Headquarters in Irving, Texas, the company owns and operates over 800 properties and franchises approximately 295 under various brand names. Most La Quinta Inns are built with Spanish or Southern architecture.

Since 1998, US Capital Partners (www.uscapitalpartners.net) has been providing well-structured, custom finance solutions to private and public companies with up to $250 million in top-line sales revenue or project size. Headquartered in San Francisco, US Capital Partners is a private investment bank that makes direct debt and equity investments between $500,000 and $100 million, participates in debt facilities, and has very wide distribution for debt and equity private placements. The firm also offers financial advisory services for buy-side and sell-side engagements and for capital formation, including early-stage financings requiring equity or debt.
 
Hilco Streambank Announces the Acquisition of Iconic Golf Brand PowerBilt® from Hillerich & Bradsby
Powerbilt Holdings, LLC, a joint venture between Hilco Streambank and CEO of One Step Up Apparel - Harry Adjmi, announced today that it has completed the acquisition of the PowerBilt golf and sporting goods product portfolio from Hillerich & Bradsby Co. (“H&B”) in a private sale.

PowerBilt is a 100-year-old brand with a history of accomplishment in both the PGA Tour and majors.  PowerBilt equipment is available in major golf markets around the world, including North America, South America, Europe, Japan and Australia.  The PowerBilt brand of products has been owned and operated by Hillerich & Bradsby which has manufactured and marketed a complete line of performance golf equipment and accessories for men, women and children at affordable prices. 

Powerbilt Holdings plans to honor the brand’s history and legacy as a performance golf equipment company through the expansion of its core golf equipment lines into several other related categories, including apparel.  Gabe Fried, CEO of Hilco Streambank said, “We are excited about the strength and historical equity of this brand and are already developing plans for expansion.”

The PowerBilt brand of products has been an integral part the golf equipment category for over a century building a strong following among both golf professionals and everyday golfers from around the world.  Fried added “We’re confident that we can leverage the brand’s rich history of delivering the high quality products as we build on the existing legacy.  Golf enthusiasts can expect to see the iconic orange Powerbilt golf bag on the professional greens again very soon.”
John Hillerich, CEO of Hillerich & Bradsby said, “We are proud to have owned and marketed this iconic brand for over 100 years and to have provided golfers at all levels of the sport with superior quality products at affordable prices.  We are certain that Hilco Streambank and their JV partners will build upon this rich history and expand the brand with our current licensees and future best in class partnerships.”

Fried indicated that as partners, Hilco Streambank and One Step Up Apparel plan to reinvigorate the iconic label and build on its current global presence, adding new revenue streams through strategic initiatives including brand licensing deals, new products and designs, expanded distribution and increased brand marketing.

Hilco Streambank, a division of Hilco Global, is a market leading advisory firm specializing in intellectual property disposition and valuation representing brands across various industries. Having completed numerous transactions including sales in publicly reported Chapter 11 bankruptcy cases, private transactions, and online sales through HilcoDomains.com and IPv4Auctions.com, Hilco Streambank has established itself as the premier intermediary in the consumer brand, internet and telecom communities. Hilco Streambank is part of Northbrook, Illinois-based Hilco Global (www.hilcoglobal.com), a worldwide financial services company and a leader in helping companies maximize the value of their assets.

Hillerich & Bradsby Co. is a sporting goods manufacturer and operator of the Louisville Slugger Museum & Factory.  The company also produces Bionic Gloves.  H & B has manufactured Louisville Slugger® wood bats, the Official Bat of Major League Baseball®, since 1884.  H&B has owned the Louisville Slugger brand from its inception in 1884 to 2015 when it was acquired by Wilson Sporting Goods. H&B now serves as Wilson’s manufacturing partner for wood bats.  The Louisville Slugger Museum & Factory attracts more than 300,000 visitors per year and is ranked as a top national and international attraction. The museum features pieces of baseball history including a Babe Ruth game-used bat from the record breaking 1927 season and a Joe DiMaggio 56-game hit streak bat from the historic 1941 MLB season.  H&B’s Bionic® gloves division designs and makes the most technologically and scientifically advanced gloves for golf, fitness, gardening and other sports.