Small-ticket office equipment issuer SierraCities (formerly First Sierra) will exit the term securitization market, but not before potentially launching one last deal for as much as $900 million, according to Gene Godick, chief financial officer of VerticalNet, which is expected to complete its acquisition of SierraCities by year-end.
The deal would close before the end of the year. As part of the terms of the acquisition, SierraCities' leasing receivables - which amount to nearly $940 million - will be removed from the balance sheet, Godick said.
Following that initial balance-sheet "cleansing," receivables generated by SierraCities will be automatically purchased by financial institutions in a "flow agreement," whereby 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.
VerticalNet is an online business-to-business e-commerce enabler, with an online marketplace called NECX.com, which deals in technology-related products, such as semiconductors, computer products and networking equipment.
Following the merger, businesses utilizing NECX.com as a marketplace will also have access to SierraCities' credit and leasing services.
Separately, VerticalNet recently launched an asset-backed commercial paper facility via administrator PNC Bank (see ASR 10/30/00).
The company securitized a $96 million portfolio of accounts receivables generated by the NECX platform. VerticalNet issued approximately $75 million in commercial paper.