The securitization of SierraCities' equipment leasing portfolio has been postponed, pending delays in the acquisition of SierraCities by online marketplace giant VerticalNet (see ASR 11/13/00 p. 1).
Under the terms of the merger, a balance sheet cleansing securitization would have taken place before Dec. 14, the agreed upon deadline for the acquisition. At press time last Thursday, analysts following the merger expected the companies to have reported new developments on Friday or early this week.
The merger was facing delays because VerticalNet's stock value fell below $15 a share, which, according an S-4 registration filed with the Securities & Exchange Commission, gives SierraCities the option to walk out on the deal.
VerticalNet's stock dropped below $15 at the end of November, and, as of last Thursday, was trading just under $9 a share.
SierraCities' equipment lease portfolio is in the neighborhood of $900 million, according to the company's last quarterly filing. The merger-driven securitization was to be SierraCities' final deal before instituting a new financing strategy, said VerticalNet's chief financial officer Gene Godick, in a previous interview with ASR.
Sources indicated that SierraCities is planning a deal for the first quarter, though whether or not this will be associated with the merger - as opposed to business as usual - is unclear.
"We're always active in the market, and when the time's right we'll get it out there," said Roger Gebhart, chief financial officer of SierraCities. Gebhart chose not to comment further with regard to VerticalNet.
VerticalNet did not return phone calls as of press time.
As Godick had said when he last spoke with ASR, following the balance-sheet cleansing, SierraCities would no longer use the ABS market as a source of funding. Receivables generated by SierraCities would be automatically purchased by financial institutions in a "flow agreement", whereby the partnering institutions will buy the loans up front, for a predetermined price based on credit score.
SierraCities last came to market with a $157 million deal in June, which was managed by First Union Securities. If in fact the company does securitize its $900 million lease portfolio, it will be the company's largest deal to date by more than $600 million, according to Thomson Financial Securities Data.
SierraCities has been leasing equipment to small businesses since 1994. The company made its debut $65 million securitization in 1996, and has been a regular presence in the sector ever since, with nine deals totaling $1.3 billion.