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Why Shares of Home Loan Servicing Solutions Gapped Up

Although we don’t believe in timing the market or panicking over market movements, we do like to keep an eye on big changes — just in case they’re material to our investing thesis.

What : Shares of Home Loan Servicing Solutions rose as much as 11% after the company announced that it has agreed to be acquired by New Residential Investment for $18.25 per share in an all-cash deal that values the company at $1.3 billion.

So what : The acquisition price represents a meager 9% premium over Friday’s closing price and is 28% below the stock’s July 2013 all-time high. Note that shares of New Residential are up almost as much as those of Home Loan Servicing today, which suggests the market believes the acquirer is capturing a significant value in the transaction.

Indeed, based on the daily price chart I’m looking at, it appears Home Loan Servicing Solutions ;shares have been trading at or above New Residential’s offer price since shortly after 10 a.m. EST. That suggests that the market might expect some (but not much) improvement on the offer.

However, the statement from Home Loan Servicing Solutions ;CEO John Van Vlack suggests that he didn’t enter negotiations with tremendous bargaining power or ambitions [my emphasis]: “I am pleased that this transaction offers our investors cash equivalent to the book value of their shares and addresses the uncertainty associated with our future financing obligations.” Getting paid book value is something to celebrate?

Now what : For investors who didn’t already own shares of Home Loan Servicing Solutions, I wouldn’t recommend buying them now — merger arbitrage (i.e., betting on the completion of announced transactions) is not an arena for individual investors. For existing shareholders, it might be worth hanging on to the shares for a couple weeks to see if a raised offer or new bidder emerges. Beyond that, it’s probably time to sell and move on the next opportunity. New Residential’s acquisition of Home Loan Servicing Solutions is expected to close in the second quarter.

Bank of America + Apple? This device makes it possible.
Apple recently recruited a secret-development “dream team” to guarantee its newest smart device was kept hidden from the public for as long as possible. ;But the secret is out , and some early viewers are claiming it’s ;destined to change everything from banking to health care. In fact, ;ABI Research ;predicts 485 million of this type of device will be sold per year. But one small company makes ;Apple’s ;gadget possible. And its stock price has nearly unlimited room to run for early in-the-know investors. To be one of them, and see Apple’s newest smart gizmo, just click here !

The article Why Shares of Home Loan Servicing Solutions Gapped Up originally appeared on

Alex Dumortier, CFA has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days . We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy .

Copyright © 1995 – 2015 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.


Are Your Student Loan Payments Higher Than Necessary?


Source: Tulane Public Relations via Flickr.

If you’re among the millions of Americans who make student loan payments each month, it’s important to know all of the repayment options available to you. Certain plans could lower your monthly payments, freeing up more of your cash.

Here’s an overview of the most advantageous repayment plans, along with the pros and cons of reducing your payment.

The Pay As You Earn plan
The Pay As You Earn is designed to keep your payments low when you’re fresh out of school and not earning much money. Then, as your income grows, so do your repayments.

The required payment amount is actually quite low: It’s capped at either 10% of your discretionary income or what your payment would be under a standard 10-year repayment plan. For the purposes of this calculation, your discretionary income is the difference between your income and 150% of the poverty guidelines for your family size and state of residence.

As an example, let’s say you earn $60,000 per year, live in any of the 48 contiguous states or Washington, D.C. (the poverty guidelines are only different for Alaska and Hawaii), and are married with one child (family size of three). The poverty guideline for 2015 is $20,090, and 150% of that amount is $30,135. Therefore your discretionary income is $60,000 minus $30,135, which comes to $29,865. Divide this over 12 months and apply the 10% rule, and you can see that your monthly payment would be capped at about $250, no matter how high your student loan balance is.

Now, the most common concern I hear is that such a low payment may not even cover the interest on the loans, and therefore it could take decades to pay off the balance. However, under the Pay As You Earn plan, any remaining loan balance will be forgiven after 20 years of on-time payments, regardless of how much is left.

It’s also worth noting that Pay As You Earn isn’t available to all borrowers yet. It was announced last year that the program will be available to all borrowers by the end of 2015, but for now it’s only open to borrowers who took out their first loan after October 2007. For those who are currently ineligible, the Income-Based Repayment, or IBR, plan, offers similar benefits: The payment cap is slightly higher at 15% of discretionary income, and any remaining balance is forgiven after 25 years.

Extended repayment
If you’d prefer payments that stay the same over the years but find the 10-year repayment plan a little too expensive, there’s also the option of an extended repayment plan, which spreads your payments over a longer time frame (up to 25 years). This tends to be an appealing option for people who earn too much to take full advantage of the Pay As You Earn plan but find the 10-year payment amount to be too high to manage along with their other expenses.

Another advantage of the extended option is that your loan balance will go down over time, which can provide a nice boost to your credit score. According to the FICO scoring formula, 30% of your score comes from “amounts owed,” which takes into account, ;among other things, the remaining balances on your loan relative to the original loan amount.

The downsides of choosing the extended repayment plan are that you’ll never be eligible for loan forgiveness as you would with the Pay As You Earn plan, and you’ll end up paying a lot more interest over the life of the loan than you would under a standard 10-year repayment plan.

For example, if you owe $35,000 in student loans at 6% interest, your monthly payment under the standard 10-year plan would be $389 per month. So, over the life of the loan, you’ll pay $11,680 in interest. However, if you choose to pay it back over 25 years, your monthly payment falls to about $225, but you’ll end up paying $32,650 in interest.

The downside to lower payments
As with anything else in life, there are pros and cons to all repayment options, including Pay as You Earn and extended repayment. As I mentioned before, you’ll end up paying more interest with an extended repayment plan than with a standard repayment plan, and if your income increases over the years, this could be the case with Pay As You Earn as well.

And with Pay As You Earn, remember that your payments will rise in proportion to your income, and this could cause a rather sharp increase if you get a raise or a higher-paying job. In the earlier example of a borrower who earns $60,000 per year, a promotion to a job paying $80,000 per year (33% raise) would increase the allowable loan payment from $250 to $415 (67% increase). With a raise that size, a higher loan payment isn’t the end of the world, but it’s definitely something to keep in mind.

Aside from these drawbacks, the Pay as You Earn plan and the extended repayment plan can be excellent ways to manage your student loan expenses while still building up a solid payment history.

Bank of America + Apple? This device makes it possible.
Apple recently recruited a secret-development “dream team” to guarantee its newest smart device was kept hidden from the public for as long as possible. ;But the secret is out , and some early viewers are claiming it’s ;destined to change everything from banking to health care. In fact, ;ABI Research ;predicts 485 million of this type of device will be sold per year. But one small company makes ;Apple’s ;gadget possible. And its stock price has nearly unlimited room to run for early-in-the-know investors. To be one of them, and see Apple’s newest smart gizmo, just click here !

The article Are Your Student Loan Payments Higher Than Necessary? originally appeared on

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1 Alarming Financial Trend in America


According to a report by the Federal Reserve, there are many positive trends in personal finance in America. In general, people are borrowing less and saving more, which is definitely a positive sign that we learned a lesson from the financial crisis.

Source: Wikipedia .

However, I saw one statistic that is rather troubling. Over the past several years, the percentage of Americans who use payday loans has risen significantly. Just how many people use these dangerous loans, and what makes them so bad?

What exactly is a “payday loan”?
The name is somewhat misleading, because these loans don’t necessarily need to be linked to the borrower’s payday. The term “payday loan” refers to a relatively small, short-term, unsecured loan, and is sometimes also referred to as a cash advance loan or payday advance.

There is typically no credit or background check required, just a verification of employment and a bank account. In the traditional payday lending model, the borrower writes a postdated check to the lender for the full amount of the loan. The borrower is expected to repay the loan in person, or else the lender can redeem the check.

In recent years, the concept of an online payday loan has grown in popularity, which could explain some of the recent surge in payday lending. The borrower applies online, and then receives funds via direct deposit, and the funds (plus any interest and fees) are withdrawn on the agreed-upon date.

Growing in popularity
According to the latest Survey of Consumer Finances ;(link opens a PDF) from the Federal Reserve Board of Governors, the percentage of Americans who have taken out a payday loan over the previous year nearly doubled from 2.4% in 2007 to4.2% in 2013.

Although this is still a low percentage on an absolute basis, it’s way too much. Quite frankly, no one should take out a payday loan unless it is a last resort.

The alarmingly high cost of payday lending
Now, the concept of a payday loan isn’t necessarily a bad one. After all, sometimes people need to pay for things a few days before their next paycheck arrives. The problem is how much some payday lenders will charge their customers.

Due to the short time frames involved, the real cost of these fees is somewhat hidden. Let’s say you take out a $500 payday loan to be paid back in two weeks (14 days). If your lender charges a $60 fee for the loan, which is actually on the low end, it equates to 12% of the principal amount. On an annualized basis, this is an interest rate of more than 300%.

In other words, if you get a new payday loan for $500 every two weeks for a year, you’ll pay more than $1,560 in just interest, even though you will never owe more than $500.

So it’s no wonder that payday lending is illegal (or severely limited) in many places throughout the U.S. In fact, 18 states have either banned,or severely limited, the amount of interest that payday lenders are allowed to charge . In an extreme example, payday lending is specifically forbidden in Georgia and is actually a violation of racketeering laws. New York and New Jersey prohibit payday loans as well.

Other states still allow payday loans, but with specific terms. For instance, Oregon permits payday loans with a one-month minimum term and a 36% maximum annual interest rate, plus a $10 fee per $100 borrowed.

However, the other 32 states have all passed legislation authorizing payday lending with absurdly high interest rates. For example, Florida allows a 419% APR on a 14-day loan. Alaska is even worse, as borrowers can expect to pay an annual rate of 520%. And Louisiana allows for interest charges and fees that combine to produce a staggering 780% APR.

Avoid at all costs
Payday loans are about the worst place you could turn for your borrowing needs, aside from actually going to a loan shark or engaging in some other illegal activity. It’s alarming that so many Americans turn to this kind of loan when they need some quick cash.

Bank loans, borrowing from friends and relatives, and even running up your credit cards are all better alternatives. Avoid these loans and their ridiculously high expenses at all costs, and over the long run you’ll keep a lot more money in your pocket.

Invest smart, and you’ll never need to use a payday loan
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The article 1 Alarming Financial Trend in America originally appeared on

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Sears to sell down Canada stake, turns to CEO again for cash

By Sruthi Ramakrishnan and Nathan Layne

(Reuters) – Sears Holdings Corp is turning to its chief executive for cash for the second time in three weeks in a sign that its efforts to sell off assets are coming up short.

The retailer announced Thursday that it would raise up to $380 million by lowering its stake in Sears Canada to 12 percent from 51 percent through a rights offering. It said Chief Executive Eddie Lampert and his hedge fund, which together own 48.5 percent of Sears Holdings, would buy about half of the offering.

The move comes after a year-long attempt to find an outside buyer for the company’s holdings of Sears Canada. The $380 million target is about half of what the company had previously indicated its stake was worth.

The rights offering indicates that Sears may be overestimating the value of its assets, including its vast property holdings, said Brian Sozzi, head of Belus Capital Advisors and a bear on Sears stock. “There just isn’t significant demand for what they are trying to unload on the market,” he said.

The offering also highlights just how dependent Sears has become on Lampert for liquidity. Thursday’s announcement comes on the heels of a $400 million loan last month from Lampert’s hedge fund, ESL Investments. Sears said those funds would be used to get it through the cash-intensive build-up to the year-end shopping season.

The company on Thursday again cited the holiday season in how it would use cash from the rights offering. Chief Financial Officer Rob Schriesheim, in a statement, also said the offering would bring to $1.445 billion the total amount of liquidity raised this year.

Sears has been closing stores, slashing inventory and selling off assets to generate cash after a decade of falling sales and dwindling margins. It has booked losses for nine straight quarters.

Sears said it was aiming to sell 40 million shares of Sears Canada in the offering. It expects to get $168 million after Lampert and his fund exercise their rights in mid-to-late October. Fairholme Capital Management, the No. 2 Sears shareholder, has indicated that some of its clients also plan to subscribe, the company said.

Fairholme, which had decided not to participate in the loan extended last month by Lampert’s hedge fund, did not immediately respond to a request for comment.

The $380 million funding target assumes that other shareholders will subscribe to the offering. Sears Canada, which has been losing market share and has posted losses in nine of the last 14 quarters, said last week that its CEO would resign after just a year at the helm.

Shareholders of Sears Holdings will have the right to buy one share of Sears Canada for each share held, at a price of C$10.60 per share. Sears Canada’s shares were down 1 percent at C$11 in trading on the Toronto Stock Exchange on Thursday.

Sears Holdings rose 6.7 percent to $26.86 on the Nasdaq, reflecting an easing of investor worries over the company’s cash cushion going into holiday shopping season. The stock had lost nearly a quarter of its value after the announcement of the $400 million loan on Sept. 15.

(Additional reporting by Ashutosh Pandey in Bangalore; Editing by Kirti Pandey, Jilian Mincer, Leslie Adler and Cynthia Osterman)

FinanceInvestment & Company InformationSears CanadaEddie LampertSears Holdings […]

The 5 Keys to Getting a Small Business Loan


Image source: Images Money .

When your business needs money, going to your local bank and applying for a loan can be pretty stressful. Unlike mortgage loans, where banks have clear-cut standards for loan approval, a business loan is just as much art as it is science.

Whether your business needs cash to buy a new facility, new equipment, or simply to fund growth, these five concepts are the key to getting your loan approved.

1. Character
This may seem really obvious, but it’s more often than not the most critical factor in your loan approval. If the bank doesn’t think you have the character to pay back your loan, then they will not approve it. Plain and simple.

Banks assess character through a variety of methods. They’ll look at your personal credit history, and many times, they’ll review your business’ credit history. In some cases, banks will want to talk with your suppliers and other business partners, as well.

The point of all this background work is to learn how you’ve handled your obligations in the past. History tends to repeat itself. If you pay your bills on time and conduct business ethically, then you have nothing to worry about. That said, it’s still worth it to check your credit report at to ensure it’s accurate.

2. Cash flow
Loans are repaid with cash. Not profits. Not growth. Not inventory. It takes cold, hard currency to pay your principal and interest. As such, banks care a whole lot about cash flow.

To banks, cash flow boils down to cash in versus cash out. That means it’s not only about your business’ sales, expenses, and profits, but also its inventory management, its account payables, and receivables.

If your business sells a lot of products at Christmas time, that means you’ll be spending lots of cash in the fall to build up your inventory to prepare for those seasonal sales. Do you have the cash flow to make your payments in addition to all that investment in your inventory?

For both you, the business owner, and the bank, cash is king. If you want the loan approval, prove to the bank that you understand cash flow and that you’re business has the cash flow to repay the loan.

Image source: Images Money .

3. Capital — the back up plan
Banks are in the business of risk and, therefore, they will always want a back-up plan. That means that your business should have enough cash held on the balance sheet in case of a short-term hiccup in your cash flow.

Further, the bank will want your business to have a low to reasonable level of debt relative to the company’s capital. The higher the ratio of your debt to your net worth, the bigger the risk, and the less likely your loan gets approved.

Think of this like you would if you were applying for a mortgage loan. The bank wants to ensure you have sufficient cash and net worth to ensure you can make a down payment, and also have enough in reserves in case of a financial hardship.

If your business distributes its extra capital every year for tax purposes, the bank may require you to personally guarantee the loan. The key to understand is that having strong cash flow is, by itself, not enough. There needs to be a back-up plan.

4. Collateral
The bank will typically require collateral for the small business loan. Most often, the collateral will correspond to the purpose of the loan. If you are buying a new facility, expect the bank to require that property as collateral. The bank can require equipment, inventory, accounts receivable, or sometimes, even all the business’ assets as collateral.

Again, this requirement is very similar to the home mortgage process. The collateral is the back-up plan to the back-up plan. If your cash flow, cash, and net worth all are unable to repay the debt, you can always sell the collateral.

5. The terms of the loan
This may be the most overlooked consideration in determining if your loan is approved or denied. Of course, if you request a loan with a 0% interest rate and a 100-year term, that will be denied. However, there are other more subtle concepts that could prevent approval.

Let’s go back to our Christmas sales example from above. Let’s say you request a five-year loan with fixed monthly payments for the purpose of buying inventory solely for this year’s Christmas season. As proposed, that loan will be denied.

Image source; Images Money

Why? Because you should have the cash to pay the loan back as soon as Christmas is over this year. You’ve sold all that extra inventory. The loan terms need to match the loan’s purpose and, in this case, that purpose is very short term.

Let’s quickly run through another example. Let’s say you need to purchase a new delivery truck that you expect will work for five years. If you request a 15-year loan to pay back that debt, that loan would be denied. Why? Because after just five years, that loan would no longer have value to you, and you’d still have 10 more years before you paid off the debt.

Before you apply for your loan, ask a few local bankers for advice on the best way to structure your debt based on your needs. That will go a long way to making the bank happy, and also making your business stronger.

Banks want to make the loan — make it easy for them
Richard Fischer, President of the Dallas Federal Reserve Bank, spoke with the Wall Street Journal in 2009 on the origins of the credit bubble. He concluded by saying, “In the end there can be no substitute for good judgement.”

Small business lending is, without question, just as much art as it is science. Your chances of seeing your loan approved are far better when you understand that art and can position your company as credit worthy. ;It’s your job as the small business owner to make that judgement as easy as possible.

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The article The 5 Keys to Getting a Small Business Loan originally appeared on

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SDLP – Seadrill Partners LLC Announces Second Quarter 2014 Results


Seadrill Partners reports net income attributable to Seadrill Partners LLC Members for the second quarter 2014 of US$31.2 million and net operating income of US$168.6 million.Generated distributable cash flow of US$51.9 million for the second quarter 2014 representing a coverage ratio of 1.09x.Declared an increased distribution for the second quarter of US$0.5425 per unit, an increase of 7% over the first quarter distribution.Completed US$1.1 billion add-on term loan B. Proceeds of the term loan refinanced existing indebtedness and increased liquidity.Issued a total of 6.1 million common units to the public and 3.2 million common units to Seadrill Limited for general corporate purposesEconomic utilization for the second quarter of 94%

Subsequent Events

Completed the acquisition of an additional 28% interest in Seadrill Operating LP for US$373 million

Financial Results Overview

Seadrill Partners LLC1 reports:

Total contract revenues of US$339.6 million for the second quarter 2014 (the “second quarter”) compared to US$260.6 million in the first quarter of 2014 (the “first quarter”). The increase is primarily driven by a full quarter of operations for the West Auriga and improved uptime on the West Aquarius, West Capricorn, and West Leo.

Operating income for the quarter of US$168.6 million compared to US$123.6 million in the preceding quarter. The increase is largely as a result of the West Auriga and uptime improvements described above.

Net Income for the quarter of US$94.3 million compared to US$43.8 million in the previous quarter. This is after the recognition of the gain/loss on derivative instruments, which reflected a loss of US$27.8 million in the second quarter as compared to a loss of US$49.2 million for the first quarter as a result of a decrease in long term interest rates in the second quarter as well as a higher level of interest rate swaps as at the end of the second quarter. The unrealized non-cash element of these amounts is US$23.5 million loss in the second quarter 2014 and a US$49.8 million loss for the first quarter 2014.


1) All references to “Seadrill Partners” and “the Company” refer to Seadrill Partners LLC and its subsidiaries, including the operating companies that indirectly own interests in the drilling rigs Seadrill Partners LLC owns: (i) a 30% limited partner interest in Seadrill Operating LP, as well as the non-economic general partner interest in Seadrill Operating LP through its 100% ownership of its general partner, Seadrill Operating GP LLC, (ii) a 51% limited liability company interest in Seadrill Capricorn Holdings LLC and (iii) a 100% limited liability company interest in Seadrill Partners Operating LLC. Seadrill Operating LP owns: (i) a 100% interest in the entities that own the West Aquarius, West Leo and the West Vencedor and (ii) an approximate 56% interest in the entity that owns and operates the West Capella. Seadrill Capricorn Holdings LLC owns 100% of the entities that own and operate the West Capricorn,West Sirius and West Auriga. Seadrill Partners Operating LLC owns 100% of the entities that own and operate the T-15 and T-16 tender barges.

Net income attributable to Seadrill Partners LLC Members was US$31.2 million for the second quarter compared to US$19.8 million for the previous quarter.

Distributable cash flow was US$51.9 million for Seadrill Partners` second quarter as compared to US$30.0 million for the previous quarter2 giving a coverage ratio of 1.09x for the second quarter. The increase is mainly as a result of a full quarter of operations for the West Auriga and improved uptime on the West Aquarius, West Capricorn, and West Leo.

The coverage ratio has been negatively impacted by the increase in units outstanding following the June equity issuance as the second quarter distribution is payable on all outstanding units at the record date. Excluding the distribution in relation to the new units issues in the June equity offering, the coverage ratio would have been 1.22x.

Distribution for the period of US$0.5425 per unit, equivalent to an annual distribution of US$2.17, represents a 40% increase from the Company`s minimum quarterly distribution set at its IPO. Subsequent to the acquisition of an additional 28% ownership interest in Seadrill Operating LP the Company will own a 58% interest in the operating company. The transaction is expected to be cash flow and net asset value accretive and therefore to lead to increased distributions.


2) Please see Appendix A for a reconciliation of DCF to net income, the most directly comparable GAAP financial measure.


Seadrill Partners has an interest in nine rigs in operation. The fleet is comprised of four semi-submersible rigs, two drillships and three tender rigs operating in Canada, the US Gulf of Mexico, Ghana, Nigeria, Angola and Thailand respectively.

Overall economic utilization for the fleet was 94% for the second quarter. Following the operational issues related to third party equipment on the West Aquarius, operations have returned to normal as spare parts were located on similar units, demonstrating the synergies of being associated with a strong parent such as Seadrill Limited.

Total operating expenses for the second quarter were US$177.7 million, compared to US$151.7 million in the previous quarter the increase is largely as a result of the West Auriga operating for a full quarter. The Company has good cost controls in place and sees little risk of changes to the operating cost structure.


On July 21, 2014 Seadrill Partners completed the acquisition of an additional 28% interest in Seadrill Operating LP for a total consideration of US$373 million. Seadrill Operating LP has an ownership interest in three ultra-deepwater drilling rigs, West Aquarius, West Leo and West Cappella, and one semi tender rig, the West Vencedor. The Company now owns a 58% interest in Seadrill Operating LP which in line with the ownership level of the Company`s other ultra-deepwater operating company which is 51% owned. The transaction increases exposure to assets that are well known to the Company and that have stable cash flows. The transaction is expected to be cash flow and net asset value accretive and therefore to lead to increased distributions.

The gross value of the 28% share acquired, after deducting the 44% non-controlling interest in the West Capella, was $804 million. The 28% share of the debt associated with the four rigs owned by Seadrill Operating L.P., net of the West Capella non-controlling interest, was $431 million. The equity portion was therefore $373 million.

The acquisition was funded with a combination of cash and proceeds from the US$300 million equity offering completed on June 19, 2014 and surplus funds from the Company`s recent term loan B financing. The Company sold a total of 6.1 million common units to the public and 3.2 million common units to Seadrill Limited in June 2014.

Financing and Liquidity

As of June 30, 2014, the Company had cash and cash equivalents, on a consolidated basis, of US$523.3 million and two revolving credit facilities totaling US$200 million. One US$100mm facility is provided by Seadrill as the lender and the second US$100mm facility is provided by a syndicate of banks and is secured in connection with the $2.9 billion term loan B. As of June 30, 2014, these facilities were undrawn. Total debt was US$3,248.8 million as of June 30, 2014; US$251 million of this debt was originally incurred by Seadrill, as borrower, in connection with its acquisition of the drilling rigs.

As of June 30, 2014 the Company had two secured credit facilities, in addition to the term loan B. These facilities expire in 2015 and 2017. A refinancing strategy should be expected at maturity debt levels or higher. Additionally the Company has a US$109.5 million vendor loan from Seadrill maturing in 2016 relating to the acquisition of the T-15.

In June 2014, Seadrill Partners executed a US$1.1 billion add-on term loan B. The term loan was upsized from US$1 billion, priced at the existing rate of Libor plus 3%, subsequently swapped to a fixed rate of approximately 5.5% and will be borrowed on substantially the same terms as the Company`s existing US$1.8 billion senior secured term loan B incurred in February 2014. The 1% amortization profile of the new facility further enables the Company to more efficiently manage its replacement capital expenditure reserves by investing in new assets. Following the completion of the add-on term loan the Company`s BB-/Ba3 rating has been reaffirmed by both S&P and Moody`s.

The Board is confident that a similar refinancing can be executed on the remaining back to back loans and related party debt in order to complete the separation of Seadrill Partners` capital structure from Seadrill Limited and further facilitate Seadrill Partners` growth.

As of June 30, 2014, Seadrill Partners had interest rate swaps outstanding on principal debt of US$3,164.2 million. All of the interest rate swap agreements were entered into subsequent to the IPO Closing Date and represent approximately 97% of debt obligations as of June 30, 2014. The average swapped rate, excluding bank margins, is approximately 2.40%. The Company has a policy of hedging the significant majority of its long-term interest rate exposure in order to reduce the risk of a rising interest rate environment.


The oil market fundamentals continue to be strong with high and stable oil prices. Except for very brief periods the oil price has remained above US$100 for the last 3.5 years and the global economy continues along its growth path following the financial crisis. Even with these strong macro fundamentals oil companies seem to be unable to generate free cash flow to grow their businesses and have entered into a period of selectivity on projects as costs escalated across their entire portfolio of projects. The current situation has some similarities to the situation in 2002-2003 when oil companies had limited free cash flow to develop new reserves. This led to an increase in oil price between 2003-2008 when Brent moved from approximately US$40 to US$100 and resulted in increased investment by the oil companies. Today, the the majority of low cost inventory has been produced and oil companies are entering a new phase in which recently discovered oil must be developed in order to grow production. These reserves are in the deep and ultra-deepwater and are far more complex than reserves discovered in prior periods. We can thereby assume that the amount of rig capacity which is needed to produce a barrel of offshore oil in the future will increase.

Over the long term, return on invested capital will be the ultimate driver of capital allocation decisions and the attractive economics of the deep and ultra-deepwater will lead to increased exploration and development spending in these regions. This view is supported by most of the major oil companies.

Ultra-Deepwater Floaters

The near term market for ultra-deepwater drilling units continues to be challenging partly driven by a reduction in exploration drilling which has led to a slower growth rate in overall upstream spending. However, there is evidence of positive developments in the number of tenders that have materialized for 2015 and 2016 projects. In the meantime, independent E&P`s could potentially fill some of the exploration gap that has been created by the cuts in exploration spending from the major oil companies.

The reported overall contracting activity has increased however we see some industry participants, especially those with older units and significant portions of their fleet requiring renewal in the short term, driving prices down. The uncertain cash flow profile of these older units is forcing contractors to make difficult decisions and lock up their best assets in order to gain some clarity on the near term outlook for their business. Older 4th and 5th generations assets are quickly losing pricing power and rates are falling faster than high-specification units. Many of these units are facing high capital expenditure requirements in order to remain part of the active fleet and owners of these assets face decisions to upgrade, swap out with a new unit, or retire the asset. We have seen two examples of this recently in Norway that may prove to be a leading indicator for trends in the global market. Worldwide, out of a total active floater fleet of approximately 300 units there are 128 units more than 25 years old. It is estimated that 70 of these units will be required to have 5 year classing surveys between now and 2017. The total cost for such a classifications can easily be in excess of US$100 million.

Seadrill Partners remains in the best possible competitive position with long term contracts, robust backlog and little exposure to the near term dayrate environment.

The longer term outlook for floaters remains solid. The number of newbuild announcements has rapidly declined and existing newbuild projects are extending delivery dates. Major oil companies continue to focus their activity on 6th generation units with high variable deckload capacity, dual BOP`s, and dual activity capabilities in a bid to advance the safety and efficiency of the rigs they employ. Several oil companies are also now introducing requirements for managed pressure drilling equipment. This is not simply a matter of preference that can dissipate if customer preferences change. This migration to a higher specification fleet is in part dictated by the increasingly challenging project requirements of recent discoveries. Oil companies must now develop the challenging reserves discovered in recent years in order to replace reserves and grow production.

The main driver on the demand side will be the anticipated need to drill development wells to bring ultra-deepwater production from the present level of approximately 1.3 million barrels per day to 5 million barrels per day forecast in 2020. The delivery of 73 ultra-deepwater newbuildings from today until 2018 will increase capacity. However, it can be anticipated that a significant part of the 128 rigs that are more than 25 years old will be retired from service as they come up for classing surveys due to uneconomic classification budgets. At the same time, ordering of new rigs has more or less stopped which sets the framework for a sharp upturn when demand and supply again are balanced.

Activity in Brazil has shown the most notable improvement as Petrobras tendered their first new rig in three years and is progressing through the acceptance process for the 2015 extensions. Following a year when the market saw a number of rigs leaving the country this is certainly a step forward. Although a seemingly bearish sign to see rigs leaving the biggest operator, it was in fact a very natural market development and a perfect example of the bifurcation and fleet renewal that is occurring on a global scale today. In addition to Petrobras` initial tender and expected extension of six rigs that have contracts expiring in 2015, it is expected that an additional three to four assets will be needed in the sort term to meet drilling requirements on the Libra field, with up to ten units expected to be required in total.

The West African market continues to be an active region for tendering activity as oil companies` move into their next budgeting cycle. In particular we see opportunities in Nigeria, Angola, and Ghana as companies work through regulatory approval processes. As demonstrated by Seadrill`s contract announcements for the West Jupiter and West Saturn, tenders will get completed; however patience and working constructively with stakeholders are key for success. Additionally, there is a clear trend that going forward companies will need to develop a strong local presence to be competitive in these markets. Not only is there political pressure to increase local content, but also a clear economic benefit in replacing international workers with local crew.

The US Gulf of Mexico is the primary market that may see a pickup in short term exploration activity given the number of indigenous independent E&P companies in the region. We have already seen opportunistic independent oil and gas companies use the present market weakness to tender for projects where profitability has improved due to lower rig rates. We see some potential to fill in a portion of the exploration spending that has been cut by the major oil companies. Longer term opportunities will materialize, however we expect this to be pushed into 2015 and 2016 similar to other regions.

In Mexico, the energy reform process is progressing at an impressive pace. Following the acceptance of major oil companies into the region and the beginning of formal licensing rounds, demand for floaters should follow. Seadrill continues to be well positioned with PEMEX having operated the West Pegasus for the last 2.5 years with a high degree of success and more recently mobilizing 5 jack-ups to the region. In the intermediate term, prior to the awarding of licenses to major oil companies there may an opportunity for a number of additional floaters based on the current budgeted spending from PEMEX.


The second quarter of 2014 was a success for Seadrill Partners having executed an add-on US$1.1 billion term loan B and successful equity offering. Additionally, operations have improved materially since the challenges encountered during first quarter and we have achieved an overall economic uptime of 94%.

Distributions have grown 7% during the second quarter, and 40% since the Company`s IPO in 2012. This growth exceeds the Board`s anticipated annual growth rate of 15% at the time of the Company`s initial public offering in October 2012. Seadrill Partners achieved a coverage ratio of 1.09x during the second quarter even after taking into consideration the increased share count following the equity offering in June. The Company continues to target a coverage ratio of 1.1x after accounting for maintenance and replacement reserves.

This track record demonstrates Seadrill Partners` commitment to growth. The Board and management team remain committed to growing distributions by acquiring operating company units or additional assets. The Board is pleased the Company has managed to diversify its fleet and reached the point where it is prudent to acquire operating company units. By moving swiftly to acquire an additional 5 rigs since IPO Seadrill Partners has opened up a new avenue for distribution growth.

The add-on term loan B completed in June is another important step towards rationalizing Seadrill Parnters` debt structure which makes the Company well positioned for future growth. The transaction, originally marketed as a US$1 billion facility and upsized to US$1.1 billion, is an add-on to the existing US$1.8 billion facility executed in February of this year and priced at the existing loan`s rate of Libor plus 3%. This represents a continuation of the strategy to refinance existing debt of acquired rigs at the partnership level with a more appropriate amortization profile. The addition of another two units to the Borrower Group increases contract duration and further diversifies the cash flows supporting the Company`s credit. By upsizing the loan, the market has acknowledged Seadrill Partners` long term contracted cash flow, visible growth profile and high quality fleet.

During the remainder of the year the Company will continue to explore financing alternatives to refinance the remaining related party debt on the West Vencedor, T-15 and T-16 at the Seadrill Partners level and continue to manage the capital structure to maximize distributable cash flow.

Operationally, the Board and management team are pleased with the improvements shown during the second quarter. The 94% utilization rate reflects the return to normal operations of the West Aquarius and West Capricorn. The ability of an MLP to maintain distributions during periods of operational challenges is linked to fleet size. The West Aquarius would have had a much more pronounced impact had Seadrill Partners owned fewer assets in its portfolio. Seadrill Partner`s ability to quickly grow its fleet has put the Company in the position to manage through periodic downtime while growing distributions. Thus far in the third quarter The West Capricorn has experienced 21 days of downtime due to BOP issues but has now returned to service. Utilization for the rest of the fleet to date in the third quarter is approximately 95% and the Company currently expects to achieve its targeted coverage ratio for the third quarter.

Distributable cash flow for the third quarter of 2014 will be positively impacted by the cash contribution from the additional 28% interest in Seadrill Operating LP. The acquisition increases exposure to assets that are well known to the Company and that have stable cash flows. The transaction is expected to be cash flow and net asset value accretive and therefore to lead to increased distributions.

The Board remains committed to its high growth acquisition strategy in order to strengthen the fleet composition, diversify the customer base, and increase backlog. The Company`s modern best in class fleet and long term contracts protect the Company from the current short-term negative market sentiment. It is a realistic scenario that demand growth for development drilling will have outpaced supply growth when the Company`s existing contracts roll off. Significant old capacity is expected to leave the market, while limited newbuild projects are likely to be initiated. This may put the Company in a strong negotiating position when it comes time to re-contract units. With an orderbacklog of US$5.1 billion, a new fleet and solid prospects for future growth the Board looks optimistically toward the future.

August 27, 2014

The Board of Directors

Seadrill Partners LLC

London, UK.

Questions should be directed to:

Graham Robjohns: Chief Executive Officer

Rune Magnus Lundetrae: Chief Financial Officer

Seadrill Partners Fleet Status
Seadrill Partners 2Q 2014 Results

This announcement is distributed by NASDAQ OMX Corporate Solutions on behalf of NASDAQ OMX Corporate Solutions clients.

The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: Seadrill Partners LLC via GlobeNewswire

FinanceInvestment & Company InformationSeadrill […]

Why You Should Avoid Payday Loans


Payday loans have become a life-line for many American families strapped for cash. Payday loans are basically high-interest, high-risk, short-term loans largely made to sub-prime borrowers who don’t have any other means of obtaining much needed funds.

According to research figures released by the Pew Charitable Trust in 2012, 12 million American adults depended on payday loans in 2010 to make ends meet while figures will most certainly have further risen until 2014.

In 2010, the average borrower took out eight loans per year with a loan size of $375 each and paid a whopping $520 on interest.

Payday loan companies providers clearly take advantage of cash-hungry, vulnerable consumers who need quick cash and are desperate enough to turn to these financing companies.

Source: Wikimedia Commons

While it is widely accepted in American society to take on consumer debt, payday loans should clearly be the absolutely last solution for people who need a short-term cash influx.

Payday loans are usually available on the spot, but they pose the very real danger of creating a dependency that could lead to a devastating debt spiral. So when you think about taking out a payday loan, you better understand very well what you are getting into.

The dangers of easy cash
The popularity of payday loans can largely be explained by how easy it is to obtain them. All you have to do is fill out on application, possibly on the Internet, agree to the lending terms and you get your cash fairly quickly.

Unfortunately, the availability of easy cash can seduce consumers and encourage them to adopt unhealthy spending habits.

Of course, there might be situations in which a short-term cash infusion will help you with an emergency such as paying for a car repair or a medical bill.

However, be aware that payday loans can push you in a debt spiral in which you are required to roll over one payday loan into the next one, with little hope of breaking the cycle.

Excessive interest rates
Make sure you understand, that payday loans are very short-term loans that need to be paid back in full plus sizable interest and fee components.

Annualized interest rates (also called annual percentage rates, or APRs) can be as much as a couple of hundred percent according to information from the Consumer Financial Protection Bureau and it is not unusual for borrowers to pay back a total of interest and fees that exceeds the amount borrowed.

If you take out a payday loan, be prepared to pay 100% or more of your requested loan size in interests and fees. There is a reason why payday loan companies can be compared to loan sharking operations.

Payday loans as a last resort
Given the excessive interest rates and fees being charged, payday loans clearly should be avoided at all costs. If you have any other chance of making up for your cash shortfall, by all means use it.

Do not use payday loans to finance purchases of consumption goods and resist the urge of taking advantage of easy credit. You will pay dearly.

The Foolish Bottom Line
Payday loans should be the absolutely last resort if you are strapped for cash. You are well advised to tap all other possible funding sources first and avoid payday loans like the plague.

The easy availability of fast credit also poses a significant risk of creating a short-term debt dependency in which consumers roll over their expensive payday loans into new loans on a consistent basis.

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China Commercial Credit Issues Update on Recovery of Loan Guarantee Payments

WUJIANG, CHINA–(Marketwired – Jul 25, 2014) – China Commercial Credit, Inc. (NASDAQ: CCCR), a microfinance company providing financial services to small-to-medium enterprises (SMEs), farmers and individuals in Jiangsu Province, today said it has made progress toward recovering a significant portion of the $5.4 million it paid in the first quarter of 2014 to lenders on behalf of 11 loan guarantee service customers who had borrowed funds from these lenders but defaulted on their loan repayments.

After determining that the majority of these defaulting borrowers had subsequently acquired the capability of repaying these funds, CCCR recovered approximately $0.7 million in cash from these borrowers and converted an additional $2.1 million of their debt into one-year loan notes payable by the borrowers directly to the company. All funds reclaimed via the above measures will be applied to CCCR’s total capital available for use on its microfinance lending and loan guarantee businesses.

The company expects to announce that its second quarter payments to lenders on behalf of loan guarantee customers, although less than in the first quarter, will still amount to about $3.7 million. Of this total, CCCR has thus far recovered $1.1 million and converted an additional $1.6 million of their debt into one-year loan notes payable by the borrowers directly to the company. The financial adjustments related to these events will be included in the company’s upcoming Q2 report.

About China Commercial Credit

China Commercial Credit (, founded in 2008, provides business loans and loan guarantee services to more than 260 small-to-medium enterprises (SMEs), farmers and individuals in China’s Jiangsu Province. Due to recent legislation and banking reform in China, these SMEs, farmers and individuals — which historically had been excluded from borrowing funds from State-owned and commercial banks — are now able to borrow money at competitive rates from microfinance lenders. According to 2012 data, SMEs account for eight of ten jobs in China and comprise nearly 60 percent of the nation’s GDP.Utilizing proceeds of the recently completed secondary public offering, the company intends to commence its financial leasing business. It also recently launched a peer-to-peer online lending platform designed to pair SME borrowers with willing lenders.

Investors seeking additional information on CCCR or wishing to register for company Email Alerts may go to or the Asia IR/PR client page at .

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of United States securities laws. You should not rely upon forward-looking statements as predictions of future events. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by law, we undertake no obligation to update publicly any forward-looking statements for any reason after the date of this release to conform these statements to actual results or to changes in our expectations. You should review the factors described in the section entitled “Risk Factors” in our registration statement on Form S-1 filed with the SEC on May 7, 2014 and other documents we file from time to time with the SEC. We qualify all of our forward-looking statements by these cautionary statements.

FinanceChina Contact:

Jimmy Caplan

Rick Eisenberg


Horizon Technology Finance Announces Prepayment and Termination of Term Loan Facility

FARMINGTON, CT–(Marketwired – Jun 17, 2014) – Horizon Technology Finance Corporation (NASDAQ: HRZN) (the “Company” or “Horizon”), a leading specialty finance company that provides secured loans to venture capital and private equity backed development-stage companies in the technology, life science, healthcare information and services, and cleantech industries, announced today the termination of its term loan credit facility (“Term Loan Facility”) with Fortress Credit Co LLC, an affiliate of Fortress Investment Group LLC (“Fortress Credit”) and the Company’s prepayment of all outstanding amounts due thereunder. Horizon maintains borrowing capacity pursuant to its existing $50 million revolving credit facility (the “Key Facility”) with Key Equipment Finance Inc. (“Key”) which contains an accordion feature allowing for an increase in the total loan commitment up to an aggregate commitment of $150 million.

“Horizon made the strategic decision to prepay the Term Loan Facility in order to significantly reduce its future interest expense and better align Horizon’s total borrowing commitments with its current equity base,” stated Christopher M. Mathieu, Senior Vice President and Chief Financial Officer. “The termination of the Term Loan Facility is expected to result in an effective interest rate on Horizon’s borrowings for the second half of 2014 of approximately 6.2%, as compared to an effective interest rate of approximately 6.9% for the first half of 2014.”

In connection with the prepayment and termination of the Term Loan Facility, Horizon expects to record a one-time interest expense charge of $1.9 million for the quarter ended June 30, 2014. These nonrecurring expenses consist of a non-cash expense of $1.1 million from the acceleration of unamortized debt issuance costs, and a cash expense of $0.8 million incurred by the payment of a prepayment fee. The non-recurring expenses are expected to be partially offset by a reduction of approximately $0.7 million in incentive fees that would otherwise have been due to the Company’s advisor in the second quarter if the Term Loan Facility had not been terminated. As a result, the net impact from the prepayment and termination of the Term Loan Facility on Horizon’s net investment income is expected to be approximately $1.2 million, or $0.12 per share, for the quarter ended June 30, 2014. There will be no ongoing obligations or expenses associated with the termination and prepayment of the Term Loan Facility.

As a result of the termination and prepayment of the Term Loan Facility, commencing with the third quarter of 2014, Horizon expects to reduce its quarterly interest expense by approximately $0.3 million, or $0.03 per share. These anticipated expense savings reflect the elimination of debt issuance costs and non-usage fees with respect to the Term Loan Facility, as well as lower future borrowing costs under the Key Facility. The Key Facility has a current interest rate of 4.00%, as compared to an interest rate of 7.00% under the Term Loan Facility. Horizon currently has no outstanding borrowings under the Key Facility, but expects to borrow under the Key Facility by the end of the second quarter.

About Horizon Technology Finance
Horizon Technology Finance Corporation is a business development company that provides secured loans to development-stage companies backed by established venture capital and private equity firms within the technology, life science, healthcare information and services, and cleantech industries. The investment objective of Horizon is to maximize total returns by generating current income from a portfolio of directly originated secured loans as well as capital appreciation from warrants that it receives when making such loans. Headquartered in Farmington, Connecticut, with regional offices in Walnut Creek, California and Reston, Virginia, Horizon is externally managed by its investment advisor, Horizon Technology Finance Management LLC. Horizon’s common stock trades on the NASDAQ Global Select Market under the ticker symbol “HRZN.” In addition, Horizon’s 7.375% Senior Notes due 2019 trade on the New York Stock Exchange under the ticker symbol “HTF.” To learn more, please visit

Forward-Looking Statements
Statements included herein may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Statements other than statements of historical facts included in this press release may constitute forward-looking statements and are not guarantees of future performance, condition or results and involve a number of risks and uncertainties. Actual results may differ materially from those in the forward-looking statements as a result of a number of factors, including those described from time to time in our filings with the Securities and Exchange Commission. Horizon undertakes no duty to update any forward-looking statement made herein. All forward-looking statements speak only as of the date of this press release.

FinanceInvestment & Company Information Contact:

Horizon Technology Finance Corporation

Christopher M. Mathieu

Chief Financial Officer

(860) 676-8653

Investor Relations and Media
The IGB Group
Michael Cimini
(212) 477-8261

Leon Berman
(212) 477-8438


Allegiant Travel Company Announces Pre-payment of Existing Term Loan

Allegiant Travel Company Announces Pre-payment of Existing Term Loan

LAS VEGAS. April 14, 2014 – Allegiant Travel Company (ALGT) has pre-paid the company`s $125 million senior secured term loan facility, which was scheduled to mature in March 2017. In addition, the company has borrowed $45.3 million from Wells Fargo Bank. Both of these transactions occurred on April 11, 2014.

“This decision allows us to refinance more expensive debt and also provides flexibility to maintain future fleet growth as well as return cash to shareholders,” stated Maurice J. Gallagher, Jr., Chairman and CEO of Allegiant Travel Company. “We are pre-paying our term loan with a payout of the balance of $121.3 million. After giving effect to these two deals, our total debt balance will be $149 million, which improves the company`s already strong balance sheet.”

The company has paid off the $121.3 million balance of the term loan through a combination of the $45.3 million loan received from Wells Fargo Bank and $76 million of internally generated cash. The elimination of the term loan unencumbers 53 MD-80 aircraft, as well as four 757 aircraft. The company has pledged the 53 MD-80 aircraft as collateral under the Wells Fargo Bank loan.

As of today, the company has 53 encumbered MD-80 aircraft, seven encumbered A320 aircraft, one encumbered A319 aircraft (Airbus aircraft were pledged in previous financings), one encumbered 757 aircraft, and five unencumbered 757 aircraft.

Allegiant, Travel is our deal.®
Las Vegas-based Allegiant Travel Company (ALGT) is focused on linking travelers in small cities to world-class leisure destinations. The company operates a low-cost, high-efficiency, all-jet passenger airline through its subsidiary, Allegiant Air, while also offering other travel-related products such as hotel rooms, rental cars, and attraction tickets. All can be purchased through the company website, The company has been named one of America`s 100 Best Small Companies by Forbes Magazine for four consecutive years. For downloadable press kit, including photos, visit: ALGT/G

Note: This news release was accurate at the date of issuance. However, information contained in the release may have changed. If you plan to use the information contained herein for any purpose, verification of its continued accuracy is your responsibility.

For further information please visit the company`s investor website:

Reference to the Company`s website above does not constitute incorporation of any of the information thereon into this news release.

Media Inquiries:
Investor Inquiries: Christopher Allen:

This announcement is distributed by NASDAQ OMX Corporate Solutions on behalf of NASDAQ OMX Corporate Solutions clients.

The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: Allegiant Travel Company via GlobeNewswire

Airline IndustryFinanceAllegiant Travel CompanyWells Fargo Bank […]