Question
From:
(Redacted)
Sent:
Friday, March 06, 2009 4:07 PM
To:
Verne, B. Michael
Cc:
(Redacted)
Subject:
Bank Loans Question
Importance: High
Mike -we don'tseem to be able to hook up by telephone so I am going to try to give you thequestions by email.
A large specialtylender is in financial difficulty (but solvent). I believe that it has not beenmaking new loans for some period of time, although I understand that it hascontinued to service loans made previously. It is part of a much largermulti-billion dollar financial enterprise (lets call it X-Bank) some parts ofwhich have already been sold, other parts of which will be sold separately laterwhen appropriate buyers are found.
This specialtylending aspect of X-Bank is going to be sold in a number of pieces. Most of thesales will consist solely of loans (in total the face amount of the specialtyloans to be sold is about $700 million -I don't know how the loans are split asbetween assets of the sub and of X~Bank, but they were funded by X-Bank) to anumber of different and unrelated buyers.
One of thetransactions will be a sale of the operating assets of the specialty lendingunit subsidiary: name, computers, building, land, furniture, fixtures,software, etc. The aggregate total consideration for these hard and soft assetswill be around $5 million -in any event WAY under the threshold. That samebuyer (or an entity within the same person) will also purchase a portion ofthis specialty loan portfolio of the sub and of X-Bank -probably less than 15%of the total portfolio -potentially in separate agreement, for a discountedpurchase price which when aggregated with the value of the hard and soft assetswill, assume for purposes of the question, be valued at more than $65.2million. After the transaction the buyer will resume the specialty lendingbusiness and continue the loan servicing operations of the seller. I don't knowfor sure if it will use the name used by the prior business or not. The buyeris a bank and may require some form of regulatory review and/or approval by theOffice of Thrift Supervision -though I don't know for sure under whatprovision.
Leaving aside thepossibility that the transaction might be exempt under the banking exemptionsof 7a(c)(7) or (8) or 802.6, is this reportable? I think not, but need someconfirmation.
The buyer is notpurchasing substantially all of the assets of X-Bank or even of this particularbusiness unit -as the assets (in the form of the loan portfolio) are beingsplit among various buyers. The unit is not substantially all of the businessof X-Bank nor is it even a particularly large portion of it, and X-Bank hasother units that make other types of loans (though I don't know whether any ofthe other units used to make the particular type of specialty loans that thisunit made.)
Please let me knowif you need any other information. ((redacted), chime in if I have omittedanything significant.) Thank you as always for your help.