FINSAC's bad debt portfolios attract Cargill

By Al Edwards, Acting Financial Editor

REPRESENTATIVES FROM one of the world's largest private companies, Cargill's Asset Investment & Finance Group (AIF) have been on the island this week for talks with both Government officials and private interest groups with a view to acquiring the Financial Sector Adjustment Company's (FINSAC) bad debt portfolios valued at approximately US$700 milion.

Wednesday Business understands that Cargill's AIF is looking to take the portfolios off FINSAC's hands for 17 cents on the dollar and is seeking certain 'sweeteners' from the Government.

AIF's investment interests span a wide variety of secured and unsecured asset types, including commercial and single-family mortgages, business loans, real estate, tax liens and consumer receivables.

As one of the largest investors in credit intensive assets in the world with assets of US$5 billion under management, AIF has built a reputation as a one-stop shopping entity, including underwriting models and related heuristics, market knowledge, key document generation, with a network of associates from asset managers to legal counsel.

As a principal investor, AIF invests on a proprietary basis in special situations involving non-investment grade assets with a focus upon credit-intensive assets. Credit - intensive refers to assets requiring a high level of due diligence to determine value and management attention to realise that value.

Consequently, these assets typically do not fit the conventional performing asset world of secondary markets and bulk securitisations. AIF's specialisation is developed through its involvement in purchasing asset portfolios from the FDIC and RTC during the late 1980s and early 1990s.

When contacted yesterday both FINSAC and the Ministry of Finance and Planning were closed due to the civil disturbances currently plaguing the capital.

However a local party, (who wished to remain unnamed) looking to become a partner with Cargill said that the U.S. giant was indeed expressing serious interest in acquiring the portfolios.

Speaking to Wednesday Business, he said: "Cargill has taken a look at the bad loan portfolios and is attempting to strike a deal with the Government. However with all the disruptions and violence that has taken place over the last few days things are at a very delicate situation. Cargill has the name and experience to manage these debts and I think 17 cents on the dollar is very reasonable."

FINSAC has made it clear that the portfolios will be divided into multiple loan pools of residential and commercial real estate assets, business assets and secured and unsecured consumer debt.

In an effort to wind down the operation of FINSAC and divest its remaining assets, the Government has turned to the American distressed asset service provider Ocwen Advisors to handle the bid process on behalf of FINSAC in the offering of over 17,000 assets totalling more than US$700 million.

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