Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Pastimes : Clown-Free Zone... sorry, no clowns allowed -- Ignore unavailable to you. Want to Upgrade?

To: UnBelievable who wrote (191191)	9/10/2002 7:03:46 AM
From: oldirtybastard	Read Replies (1) \| Respond to of 436258

more creative financing Reuters Market News U.S. niche banker to securitize patents, logos Monday September 2, 7:59 am ET By Aleksandrs Rozens NEW YORK, Sept 2 (Reuters) - At a scandal-ridden time when many companies are finding it harder to sell bonds, one New York investment firm aims to help turn fashion logos and drug patents into a way to raise cash more cheaply. Some companies can still sell corporate bonds even if it means paying more to investors to compensate for perceived risk in a post-Enron era. But banking boutique UCC Capital, with the help of a General Electric Co. unit, hopes to help other cash-hungry companies raise money selling bonds backed by income from trademarks, licensing fees and patents. Using capital from GE EMX, UCC hopes to make as much as half a billion dollars in loans to companies that put up as collateral their regular income from patents or from the licensing of fashion logos. It will then bundle the loans into bonds. The key to UCC's strategy is a practice used in the U.S. housing market over the last two decades in which mortgage lenders raise money by bundling regular home loan payments into bonds and selling them on Wall Street. "It is the next evolutionary step in intellectual property securitization," said UCC founder and president Robert D'Loren, who sees his company exploiting a unique niche. "We have filled a void that's been in the middle market lending and investment banking business for the last two or three years," said D'Loren. "Given the recent consolidation in investment banks and finance companies, we have positioned ourselves to fill the gap with a better lending model." Loans made by UCC are expected to range from $30 million to $50 million but have no set limit. UCC said it hopes to underwrite $400 million to $500 million in loans by next summer and twice that amount in the following year. UCC may retain the loans, which are expected to have 7- to 10-year terms, or sell them as a so-called asset-backed bonds. SWEET CANDIES Shoe company Candies Inc. recently completed a bond, worth $20 million, by pooling and selling regular income from licensing its name to handbag and eye-wear makers. UCC structured the deal and it was sold to an insurance company. Companies in sectors like technology, pharmaceuticals and telecoms may also be able to put up their patents as backing for loans and UCC is currently considering loans to a film company that will stake its library of films as collateral. UCC likely won't stray far from the entertainment world. The company signed a letter of intent recently to buy a West Coast film finance company in the business of funding small film projects for more than 30 years, D'Loren said. Using the asset-backed bond market, D'Loren said, a company can issue debt three to five credit-rating notches above the rating on its own corporate debt. This is important because a higher rating cuts the cost to a company for raising money, and bonds backed by a regular cash flow can get a higher rating. For example, a company with a triple-B rating could raise money through the sale of debt rated single-A, saving the company 2-1/2 percentage points on the loan rate, D'Loren said. "With our relationship with GE, we have a tremendous capability and reach," D'Loren said, predicting the company would soon be taking its asset-backed innovation overseas.