National Goes Private Amid Headlines


National Auto Finance will place its upcoming $60 million loan securitization privately with a single investor in order to avoid a possible icy reception from the public market, as the company has once again announced negative returns in its most recent earnings report.

The private placement is a departure from National's usual securitization strategy, which up to this point has consisted of three publicly issued deals.

Keith Stein, chief executive officer at Boca Raton, Fla.-based National, said that while he felt the earnings trend pointed to a positive profitability outlook for the future - the company reported 1999 second quarter losses of $1.7 million, compared with red ink of $4.3 million a year ago - a private issue was a necessary step because of the spat of negative headlines associated with the auto lender.

"It's mostly a sign of what we can do and what the market can take at this time," Stein said.

National has been in the red since 1997, when it posted a loss of $18.6 million. After a restructuring in 1998, it incurred writedowns of $33.7 million.

Approximately $54 million of the current offering will be sold to one investor, while the rest will be retained by the company. Financial Security Assurance, the guarantor on all of National Auto's prior deals, will also provide a wrap on the upcoming offering.

Another FSA-wrapped deal from National is expected to hit next year in the first quarter. "It could be either public or private," Stein said, "but we'll use an underwriter this time."

No underwriter was used on the current transaction, something Stein said is per usual on a deal that has one or several allocations. Stein said the company was in the selection process for managers but he would not name the contestants.