Archive: September, 2009
Food Connex, a modest-sized ($1.5 million/year sales, 10-employee) food-distribution software firm in Furlong, Bucks County that counts Amoroso Baking and Vincent Giordano Corp. among its local clients, is rolling out a new "software-as-a-service" system, VictualNet, that allows small distributors to track sales, inventories, customers and suppliers from laptop, mobile (on-the-truck) or office personal computers, for $199/month.
VictualNet lets anyone with a computer and a phone set up a food distribution business, says founder Paul Hernandez-Cuebas, who's been selling inventory and payment-tracking systems locally (doing business also as Integrated Management Solutions) for the past 20 years.
Hernandez raised nearly $1 million to build and market VictualNet the old fashioned way: with his own money - and a bank loan. "Paul has reason to be excited. Lots of delivery systems are moving toward a Web-based product. We think he's first in the market with a product that meets the needs of the customer," William Maeglin (corrected), head of business lending at Univest National Bank and Trust in Souderton, told me.
Lincoln National Corp., the Radnor annuities and life insurance company that sponsors the Eagles stadium, won't likely buy back the U.S. Treasury's $900 million Capital Purchase Plan preferred-stock insurance company until 2011, writes Sandler O'Neill Research analysts Edward Shields and Paul Newsome in a note to investors today, after meeting with Lincoln's bosses, ceo Dennis Glass and cfo Fred Crawford.
Sandler says Lincoln has enough cash to cover likely losses, and neither its reputation nor its operations have been hurt by the dividends ($4.6 million last quarter) that it's paying taxpayers or the embarrassments that can follow when you take the government's money. Lincoln has $700 million in cash on hand, and said this summer it will raise another $700 million by selling Lincoln's Philadelphia-based Delaware Group investments to Australia's Maquarie Group and Lincoln's British business to Sun Life.
While Lincoln's commercial real estate investments are still losing value, rating agencies (meeting with Lincoln this week) look like they're done with downgrades for now, though "improvements in ratings will be long in coming."
"Security guards have been ordered to keep former baseball star Lenny Dykstra or anyone representing him away from his two estates in the exclusive gated community" of Lake Sherwood, west of Los Angeles, reports the local Ventura County Star here. They're acting on orders from lenders who financed Dykstra's purchase of the millionaire homes, now in default.
Reporter Stephanie Hoops also tracks down the Beverly Hills pawnbroker who posted Dykstra's Phillies and Mets championship rings and other items for auction after he left them there for cash last Spring and didn't buy them back. "Sad to see a guy who used to be on top of the world years ago, and is where he is now," says shop owner Yossi Dina. Link to the auction listing here.
Wilmington Trust Corp. shares are up 45% since the company warned in July that profits would fall. It's as if investors have stopped worrying about credit risk and are just hunting for bargains, writes Janney Montgomery Scott bank analyst Stephen Moss in a report to clients this morning. But Janney doesn't buy it: "We remain concerned about credit risk and believe a capital risk is necessary." Moss confirmed his previous "Sell" rating.
Moss notes the bank's quarterly report marks 13.5% of its loans as "substandard," on the "watch list", or "doubtful" as of June 30, threatening capital and profit levels. That rate is up more than two percentage points from March, as construction and business loans credits kept going bad.
But actual losses at Wilmington Trust aren't unusual, investor relations chief Ellen Roberts. Wilmington Trust charged off 1.54 percent of loans, annualized, in the second quarter, compared to 3.08 percent for a group of 44 regional U.S. banks. If the "substandard" and "doubtful" loans correlate to charge-offs, a lot of other banks will blow up long before Wilmington Trust runs out of cash.
"If mergers and acquisitions business were a movie, we'd be 'Crouching Lender, Hidden Seller,'" says Philadelphia investment banker Andy Greenberg, co-owner of GF Data Resources, a Philadelphia firm that tracks U.S. business deals.
The number of mid-market M&A deals (worth $10 million to $250 million) at 128 U.S. buyout and private-equity firms fell to 21 in the first half of 2008, from 56 in the same period last year and 88 in first-half 2007, GF said today.
Investment firms have plenty of money left over from the mid-2000s, but they're having a tough time getting sellers to accept today's lower prices, Greenberg told me. Only the strongest small medical, info tech and manufacturing companies are getting sold, at prices that still resemble the last two years' levels - 6x to 7x earnings (before interest, taxes, depreciation, amortization), or 2.5x to 3x debt/EBITDA.
Revised: Last year’s markets collapse left the Pennsylvania State Employees’ Retirement System under-invested in stocks, and over-invested in venture capital and other private equity, chief investment officer John Winchester said in a statement yesterday.
“As of June 30, publicly traded stocks represented 23% of the fund, versus a target of 47%; conversely, the illiquid private equity class represented 15.8% of the fund, versus a target of 9.3%.”
The recovering stock market helped boost the system’s total investment value by nearly 6 percent, to $22.6 billion, in the three months ended June 30.
New Jersey state economic development officials were due in Delanco today to tour Black Bear Distribution LLC's 266,000-square-foot cold cut refrigerator facility, which distributes meat products for Dietz & Watson and other food companies in a converted import warehouse, says general manager John Tsigounis.
Black Bear scored an estimated $175,500 in state Business Employment Incentive Program (BEIP) grants, stretched over 10 years, "based on its expected creation of 67 new jobs," says Economic Development Adminsitration spokeswoman Erin B. Gold. "To date, the company has created approximately 90 new jobs," so its actual benefit - calculated as a refund on employee income taxes - will be that much greater. Black Bear invested $20 million in upgrading the cold storage site, which Gold called a highly positive return on taxpayers' investment.
Who's Black Bear? It's owned by Ruth Dietz Eni and her children Louis Eni, Chris Eni, and Cindy Eni Yingling - grandchildren of Dietz & Watson founder Gottlieb Dietz.
"Philadelphia is really the center of the universe, in cyber insurance," says Nicholas C. Economidis, underwriter for "Information Security and Privacy," also known as "cyber", insurance lines for Lloyds of London insurance syndicate member Beazley Group's U.S. office in Philadelphia.
Next week data-security underwriters from some of the nation's biggest insurers, their lawyers and legal antagonists, and government watchdogs, from Hartford, New York and the other insurance centers, will gather in Philadelphia for the fourth straight year for their Cyber and Data Risk Insurance Conference at the Union League. Economidis is a co-chair, with Robert Parisi of Marsh FinPro in New York.
Economidis takes the long view: "Crime happens in waves," and new classes of crime "are very profitable for the criminal and very low risk, at first. Then society responds and cracks down. That's how it happened with bank robbery, then burglary, then drugs, now ID theft.