Prime Continues ABS Program


Despite the sale of a subsidiary and its portfolio of specialty vehicle leases, Prime Capital Corp. will continue to access the asset-backed securities market going forward.

"Because we sold the portfolio another way, we don't need to go to the market today but we do anticipate going to market again in the year 2000, sometime in the second or third quarter," said Chief Financial Officer Vern Landeck.

The company recently announced the sale of Capital Alliance Financial Services, its specialty vehicle company created in 1997, and the subsidiary's $70 million loan portfolio to an undisclosed buyer.

"We decided that we wanted to focus the company exclusively on information technology and the communications marketplace," he said. "We also found that the servicing requirements of the vehicle company were not complimentary to the rest of our business."

The sale would not affect Prime Capital's issuance volume though. "The size of the next transaction would be similar to ones we've done in the past. The next deals wouldn't be smaller," he stated.

An earlier report said that due to the sale Prime Capital delayed plans to come to market in February 2000. Landeck denied the report.

"We made the decision six months ago to sell this business and the portfolio. When we did that,we knew we were not going to go to market for a securitization. So we never cancelled or delayed a securitization. But we did that by default by deciding to sell, thus precluding the need to go to market," he added.

The company did make preliminary preparations for a securitization, however, as a precaution in case the sale didn't work out.

The only thing that may change in future deals from Prime Capital is the composition of the company's portfolio, Landeck said. Compared to the past two years, the future transactions would only involve Prime Capital's communications and information technology line.

"Since the specialty vehicle business was only started in 1997,its assets were only included in Prime Capital's last two securitizations. I believe it comprised 10% of our 1998 securitization and 40% of our 1999 transaction."

Prime Capital last came to market in May 1999 with a $74 million securitization of equipment lease receivables. Merrill, Lynch & Co. served as placement agent for the four-part deal. The deal was comprised of A, B, and C class notes plus certificates.