Frontier Leasing Corp. is in the process of selling approximately $50 million of small- and middle-ticket equipment lease-backed paper via WestLB, sources said. Proceeds from the term securitization are being used to pay down a multi-year warehousing facility of undetermined size, set up last year by WestLB, for interim funding of eligible lease contracts and financed equipment by Frontier.
The fixed-rate, Rule 144A offering contains three classes, rated single-A down through double-B. Specific capital structure details could not be confirmed. Credit support consists of the subordination of certificated classes, funds on deposit in a cash collateral account and overcollateralization.
This is the third securitization in as many years for the issuer and is scheduled to price toward the end of this week, settling Sept. 24. Previously, Frontier sold equipment lease ABS in April of last year and September 2000, and has $95 million total outstanding. Going forward, Frontier plans to issue on an annual basis, company sources said.
Based in Urbandale, Iowa, Frontier Leasing originates and services equipment leases to small- and medium-sized businesses for items with purchase prices averaging $35,000. The equipment leased by Frontier is very specialized - mechanical car wash, commercial laundry, office, computer and medical/dental equipment, for example. For transactions greater than $250,000, Frontier focuses on being a credit lender, with underwriting policies and procedures focused more on the creditworthiness of the lessee rather than the value of the equipment financed.
WestLB has been busy of late, following the completion of a servicer advance fee ABS for Saxon Capital (see ASR 9/6/02 p. 8). WestLB is said to have three auto loan securitizations coming to market in the near term, one of which for a first-time issuer. In addition, WestLB is reportedly setting up a servicer advance ABS master trust similar to the Saxon transaction for an undisclosed but frequent issuer of mortgage-related ABS. WestLB refused to comment on pending transactions.