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All-Cash Sales Declined in June, Opportunities Arise For Home Buyers

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Florida had the highest share of all-cash home sales at 50.9 percent in June.

Chicago, IL (PRWEB) September 12, 2014

The Federal Savings Bank shares two recent releases highlighting the data showing all-cash sales declined in June.

The Federal Savings Bank was intrigued by a recent September 9th report from Corelogic has revealed a decline in all-cash home sales, giving mortgage-dependent home buyers more footing in the housing market.

In June, 33 percent of home sales were made with cash, according to recent data from CoreLogic. June’s rate of cash sales was down from 34.4 percent in May and 36.6 percent in June 2013. The decline marked a six-year low, and the last time cash sales were at this rate was 2008, which is seen as the unofficial start of the housing downturn. Since the U.S. real estate market has been improving, the presence of cash transactions has been decreasing, with CoreLogic noting there have been year-over-year drops each month since January 2013.

All-cash sales hit a peak in 2011, when they accounted for 46.2 percent of total sales. Prior to the downturn, these type of transactions averaged 25 percent.

The Federal Savings Bank found the CoreLogic in alignment with another recent report from RealtyTrac, which revealed a decline in all-cash and investor home sales in the second quarter of 2014.

New York has one of the highest cash sale rates
CoreLogic also broke the data down by states, noting Florida had the highest share of all-cash home sales at 50.9 percent in June. The Sunshine State was followed by Alabama (48.1 percent), New York (44.6 percent), Kentucky (40.1 percent) and Nevada (40 percent).

The high rate of all-cash transactions has been a notable trend in New York, particularly in New York City’s Manhattan area. Citing data from real estate expert Jonathan Miller, DNAInfo reported nearly 60 percent of condo and 30 percent of co-op purchases in the first quarter of 2014 were made with cash. Many of these home buyers are happy to avoid the steps required for buying a house with a mortgage and present stiff competition for first-time buyers who typically require financing.

Average down payments increased in Q2 2014
Despite the declining presence of cash sales, buyers are still doing what they can to remain competitive in the housing market. A recent report from LendingTree revealed the average down payment for a conventional loan granted to the marketplace’s customers was 17.28 percent of the loan amount in the second quarter of 2014. This was an increase from 15.78 percent the previous quarter.

Doug Lebda, founder and CEO of LendingTree, said the rise in average down payment percentages could be the result of buyers offering more to appear more attractive to sellers.

“We’ve seen an overall downward trend in down payments over the past 18 months, but appreciating home prices and pent-up demand has brought borrowers back into the housing market with more funds available for a down payment,” Lebda said. “Additionally, in certain markets, a competitive real estate environment may be forcing some homebuyers to put more money down in order to strengthen their offers.”

Contact the Federal Savings Bank, a veteran owned bank, for more information about preapprovals for low-cost financing, a viable tool for staying competitive in the housing market.


[…]

New York Prosecutors File Criminal Charges Against Payday Loan …

Image reuters_logo.jpg

Aug 11 (Reuters) – Manhattan prosecutors filed criminal charges against a dozen companies and their owner, Carey Vaughn Brown, accusing them of making payday loans that defied New York’s limits on interest rates, the New York Times reported.
Prosecutors explained how Brown amassed “a payday syndicate,” controlling every part of the loan process, the Times said. Payday loans are usually taken by employees before they get their paychecks and are paid when they receive their salaries.
Brown, along with the chief operating officer for several companies, Ronald Beaver, and legal adviser Joanna Temple, “carefully crafted their corporate entities to obscure ownership and secure increasing profits,” New York Times quoted the authorities as saying. (http://nyti.ms/1kXYOej)
Brown incorporated Mycashnow.com, an online payday lending arm, in the West Indies, to try to put the company beyond American authorities’ reach, the Times said.
Brown’s other companies were incorporated in states with little regulation and modest corporate record-keeping requirements, prosecutors said, according to the Times.
The three executives accused of orchestrating the scheme were charged on Monday with violating usury rates and a count of conspiracy, New York Times reported.
Brown’s lawyer could not immediately be reached for a comment. (Reporting by Kanika Sikka in Bangalore; Editing by Lisa Shumaker)

[…]

American Apparel lender demands $10M loan payment after CEO’s exit

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American Apparel is suddenly facing a cash crunch.

A key lender to the embattled clothing company on Thursday demanded repayment of a $10 million loan, threatening a liquidity crisis for the retailer on the heels of its ouster of CEO Dov Charney, The Post has learned.

Lion Capital, a UK-based investment firm that has been friendly to Charney, denied a waiver on the default triggered by the executive’s dismissal, forcing American Apparel to raise funds to pay it off — either by issuing new debt or additional equity in the company, sources said.

American Apparel’s debt structure has cross-default provisions that also will trigger a default on the company’s $30 million credit line with Capital One, potentially creating a cascading effect that could force a bankruptcy if it can’t line up funds.

“They’re either going to have to add debt at punishing rates, or raise more equity and further dilute shareholders or go bankrupt,” according to a source briefed on the situation.

The Los Angeles sportswear manufacturer and retailer could also be a takeover target — its shares have soared nearly 41 percent in the last two trading days, closing Thursday at 74.4 cents a share.

American Apparel couldn’t immediately be reached for comment Thursday. Lion officials declined to comment.

Lion has given American Apparel until July 4 to repay the loan, sources said.

Other lenders, including Cerberus Capital Management, have expressed interest in refinancing the debt, several sources noted.

An American Apparel store on the Lower East Side of ManhattanPhoto: Stefan Jeremiah

This week, American Apparel confirmed it has hired investment bank Peter J. Solomon to raise money in case Lion decided to call in its loan.

Co-Chairman Allan Mayer, who led last week’s coup against Charney following the company’s annual meeting, said late Thursday that the company is still in talks with Lion about the status of the loan, declining to comment further.

Insiders said Lion CEO Lyndon Lea became frustrated in recent days after American Apparel’s board appeared to stonewall him in response to questions about the internal investigation that spurred Charney’s dismissal.

In a June 18 termination letter to Charney, the board cited “willful misconduct,” including allegations that he allowed an employee to create a blog with naked pictures of Irene Morales, a former employee who had filed a sex harassment suit accusing Charney of making her his “sex slave.”

In addition to denying American Apparel a waiver on its debt, a source said Lion has been advised by its lawyers to temporarily forgo its right to take two board seats because of provisions triggered by Charney’s ouster.

The concern, according to the source, is legal liability for board members engaged in an arbitration dispute with Charney, who is alleging he is entitled to as much as $25 million in severance.

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[…]

High-end pawnshops cater to the asset-rich

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Pawnshops are emerging that lend money to cash-poor consumers with pricey collateral.

If you’ve got a cash-flow problem and a rare Picasso painting lying around your house, you’re in luck. A growing niche of high-end pawnshops wants your business.

That’s right. The pawnshop, which has long toiled under the reputation as a seedy lender of last resort for the desperate, is going after the luxury market.

Some pawnshops are offering thousands to millions of dollars in loans, with items for collateral ranging from Rolex watches to Maserati cars to Super Bowl rings or fine art. It’s a far cry from the average $150 loan on smaller items that are seen in the pawn industry.

“We’re starting to see a trend of this becoming more popular,” says Emmett Murphy, spokesman for the National Pawnbrokers Association.

Murphy says the pawn industry always has had some high-end loans, but the growth in these kinds of deals has surged since the downturn in the economy. Small businesses and consumers who normally were creditworthy have found themselves stuck in a credit crunch, without easy access to quick cash.

Compare the average annual percentage rates offered on different loan products. Note: Not every product is meant to have a loan length of a year or more.

How pawnshop loans stack up against other loans

Payday loans391% to 521%Credit cards (for variable-rate cards)About 15.5%Auto loans (for a new, 60-month loan)About 4.2%Car title loans36% to about 300%Mortgage rates (30-year fixed)About 4.25%Pawnshop loans36% to about 300%

Sources: Center for Responsible Lending, Bankrate.com, National Pawnbrokers Association

Clients who are asset-rich, cash-poor?

Meanwhile, the pawnshop industry has been getting a makeover, thanks in part to TV shows such as “Pawn Stars” and “Hardcore Pawn” that helped change the image of the industry into “more of a mainstream financial service,” Murphy says.

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The shows have put “the pawn business in many people’s living rooms,” says Steve Krupnik, a pawn industry consultant and author of “Pawnonomics.” He says the pawn industry is now realizing “the market for pawnshop goods and services is substantially larger than what was originally thought.”

Tom McDermott is general manager for U.S. business with Borro, a pawnshop with storefronts in New York and London that’s also online. It offers loans from $1,000 to $2 million. McDermott says half of his company’s business is based on consumers who are “asset-rich and cash-poor,” while the other half is made up of entrepreneurs and small businesses who need quick cash.

High-end pawnshops, a growing niche

McDermott says Borro saw nearly 100 percent growth in 2013, doing $50 million in loan volume.

“As banks increasingly became more constricting in their lending underwriting, people found they can get access to capital via their luxury assets,” McDermott says.

Other companies have seen similar growth. The Beverly Loan Co., which has been in Beverly Hills, California, for about 75 years and calls itself the “pawnshop to the stars,” opened a second location last year in the diamond district of Manhattan in New York.

“Someone may drive a Ferrari and have a Harry Winston diamond and artwork on their walls but not necessarily have cash in the bank,” says Jordan Tabach-Bank, owner and chief executive of the Beverly Loan and New York Loan companies.

How much interest do you pay?

Pawn loans work differently from traditional bank loans. Because the consumer is offering up an item for collateral, pawnshops don’t generally run credit checks or require a lot of financial paperwork. Instead, the loan is offered based on a percentage of the item’s value. In addition, pawnshops tend to focus on short-term lending.

But the trade-off could be higher interest rates than a traditional loan.

Pawn loan interest rates tend to fall between 3 percent and 25 percent per month, Murphy says, with a 30-day loan at an interest rate of 10 percent being the typical rate. Murphy says pawn transactions are meant to be very short-term loans and are often lower than the cost of a bounced check.

The rates vary widely, depending on factors such as state laws and the size of the loan. For instance, New York law allows for a maximum 4 percent monthly interest rate, which could translate to an APR of 48 percent. Texas allows pawnshop lenders to charge as much as 240 percent annually, depending on the size of the loan.

The New York Loan Co. charges a 4 percent monthly rate, Tabach-Bank says. Borro’s U.S. office in New York charges from 2.99 percent to 3.99 percent in interest per month for its loans, and generally offers six-month terms.

Pawnshops put on the glitz

The items coming into high-end pawnshops sometimes are rare.

Among the more unusual items McDermott has seen are a 2004 Olympic gold medal pawned by the medalist and a jacket owned by rapper the Notorious B.I.G.

Other things that have come through some of these upscale pawnshops: Steve McQueen’s motorcycle jacket from the movie “Bullitt,” a Salvador Dali watercolor, Beatles memorabilia, Lamborghini cars, Super Bowl rings and Fender classic guitars.

A few companies, such as Borro, Pawngo and iPawn Inc., have launched Internet businesses where consumers can send in items and get loans without ever stepping foot in a store.

Speedy online transaction

Dawn James, who owns a clothing boutique in Chicago, pawned a diamond ring with Borro earlier this year. She needed cash to buy some new inventory and contacted Borro, which sent her a secured safety deposit box through FedEx. She put the ring in it and shipped it back. The next day, she had her money.

“I’d never gone to a pawnshop before,” James says. “Business loans take so long. That could have been two or three months before I got that money.”

Some aren’t surprised that the pawn industry is reaching out to consumers with deeper pockets.

“Everything is going luxury, including pawnshops,” says Milton Pedraza, chief executive of the Luxury Institute, a research firm focused on high-end consumption.

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U.S. Cash Home Purchases Surging as Rates Rise

Greg Leffel, an investor in Columbus, Ohio, said he relishes cash deals as much as he dislikes home loans. He has spent $150,000 buying and renovating 10 foreclosed houses in the past two years and turned them into rentals.

“Lending is so tight, and even if you do get a loan you’d have to jump through a bunch of hoops first,” Leffel, 44, said. “I like buying with cash, because then I can control my investments.”

More from Bloomberg.com: Yellen Says ‘High Degree’ of Accommodation Still Needed

Investors like Leffel helped spur all-cash home purchases to a record 43 percent of U.S. deals in the first quarter, more than double the share a year ago, according to data firm RealtyTrac Inc. Cash is keeping residential sales trudging along while mortgage lending plummets, hurt by rising interest rates and stiff credit requirements. Americans seeking a loan to purchase their first dwelling are increasingly shut out.

“The cash buyers today mean that all is not well in the housing market,” said Clifford Rossi, finance professor at the University of Maryland’s Robert H. Smith School of Business. “First-time home buyers should make up 40 percent and we’re not seeing it because of mortgage rules.”

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U.S. lenders are cutting jobs as business contracts. They made $226 billion in mortgages in the first quarter, a 17-year low, according to the Mortgage Bankers Association in Washington.

Small Investors

Smaller investors, who deploy cash for homes to rent, flip, or vacation in, are finding better deals now that institutions have pared buying foreclosures, said RealtyTrac Vice President Daren Blomquist. Cash sales are rising from coast to coast, comprising more than half of all purchases in many metropolitan areas in the first quarter.

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In the Miami area, 67.1 percent of sales were cash deals; New York posted 57 percent; Detroit recorded 53.5 percent; Atlanta had 53.2 percent, and Las Vegas posted 52.2 percent, according to Irvine, California-based RealtyTrac.

In Manhattan, buyers are using cash for trophy apartments and to gain an advantage over borrowers who must depend on loans to finance a purchase. Pej Barlavi, owner of brokerage Barlavi Realty LLC in Manhattan, said three of his five current clients buying homes prevailed with all-cash offers.

Barlavi said two of them are hedge fund managers who used year-end bonuses to buy the properties: a $2.2 million two-bedroom apartment in Midtown, selling for $150,000 above the asking price; and $1.5 million for a one-bedroom in Tribeca. His client in the second transaction was “nudged higher by a foreign buyer” before being chosen by the seller, Barlavi said.

Foreign Buyers

“In Manhattan, you have foreign buyers coming in and using properties as a second, third, fourth or fifth home and hedging risks in their home countries,” said Chris Mayer, a real estate professor at Columbia University Business School in New York.

Private-equity firms, hedge funds and other institutional investors have spent more than $20 billion to buy as many as 200,000 rental homes in the last two years. They snapped up properties after prices fell as much as 35 percent from the 2006 peak and rental demand rose from the almost 5 million owners who went through foreclosure since 2008.

New York-based Blackstone Group LP (BX), the biggest U.S. single-family home landlord, cut purchases by 70 percent from last year’s peak and is now concentrating on just five markets, Jonathan Gray, global head of real estate, said in a March interview. Blackstone has invested $8.5 billion since April 2012 to amass almost 44,000 rentals in 14 cities.

Strict Credit

American Homes 4 Rent (AMH) and Colony American Homes, the second- and third-ranked U.S. home landlords, have also cut acquisitions as the rebound in prices requires them to raise capital or improve operations.

“As institutional investors pull back their purchasing in many markets across the country, there is still strong demand from other cash buyers, including individual investors, second-home buyers and even owner-occupant buyers,” RealtyTrac’s Blomquist said.

Banks’ stricter credit standards following the housing crash, in combination with rising mortgage rates, have put the brakes on lending. More than 40 percent of borrowers had FICO scores above 760 in 2013 compared with about 25 percent in 2001, according to Goldman Sachs Group Inc. analysts in a Feb. 20 report. The 4.22 percent average rate for a 30-year fixed mortgage on May 6 rose from 3.53 percent a year ago, following the Federal Reserve’s announced plan to taper its bond buying, according to Bankrate.com.

Wells Fargo (WFC)

“The increase in all-cash purchases is partly because rates are higher than they were a year ago, so it’s made buying with a mortgage more expensive on top of home price increases,” said Jed Kolko, chief economist at real-estate information service Trulia Inc. in San Francisco.

At Wells Fargo & Co., the biggest U.S. mortgage provider, home-loan originations plunged to $36 billion in the first quarter after surpassing $100 billion for seven straight quarters ending in June 2013, according to the San Francisco-based bank. Second-ranked JPMorgan Chase & Co.’s $17 billion total in the first quarter fell below the trough in originations made during the housing crash.

First-time buyers in particular are struggling to get home loans. They comprised 30 percent of total existing-home sales in March compared with an average of 35 percent since October 2008, according to the National Association of Realtors.

Without these buyers, existing-home sales are declining. They fell 7.5 percent in March to a seasonally adjusted annual rate of 4.59 million compared with a year earlier, according to NAR. The sales volume in March remained the lowest since July 2012, according to the trade group.

“With fewer first-time buyers, you end up with more all-cash buyers and less trading up in home activity,” said Columbia’s Mayer. “To get that ecosystem working, you need to have first-time homebuyers so the trade-UNp purchasers can buy bigger homes.”

To contact the reporters on this story: Dan Levy in San Francisco at dlevy13@bloomberg.net; Alexis Leondis in New York at aleondis@bloomberg.net

To contact the editors responsible for this story: Vincent Bielski at vbielski@bloomberg.net; Kara Wetzel at kwetzel@bloomberg.net Rob Urban

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All Cash U.S. Home Purchases Surge With Rising Rates

Greg Leffel, an investor in Columbus, Ohio, said he relishes cash deals as much as he dislikes home loans. He has spent $150,000 buying and renovating 10 foreclosed houses in the past two years and turned them into rentals.

“Lending is so tight, and even if you do get a loan you’d have to jump through a bunch of hoops first,” Leffel, 44, said. “I like buying with cash, because then I can control my investments.”

More from Bloomberg.com: Son Makes $58 Billion on Alibaba With Buffett-Type Return

Investors like Leffel helped spur all-cash home purchases to a record 43 percent of U.S. deals in the first quarter, more than double the share a year ago, according to data firm RealtyTrac Inc. Cash is keeping residential sales trudging along while mortgage lending plummets, hurt by rising interest rates and stiff credit requirements. Americans seeking a loan to purchase their first dwelling are increasingly shut out.

“The cash buyers today mean that all is not well in the housing market,” said Clifford Rossi, finance professor at the University of Maryland’s Robert H. Smith School of Business. “First-time home buyers should make up 40 percent and we’re not seeing it because of mortgage rules.”

More from Bloomberg.com: Yellen Says ‘High Degree’ of Accommodation Still Needed

U.S. lenders are cutting jobs as business contracts. They made $226 billion in mortgages in the first quarter, a 17-year low, according to the Mortgage Bankers Association in Washington.

Small Investors

Smaller investors, who deploy cash for homes to rent, flip, or vacation in, are finding better deals now that institutions have pared buying foreclosures, said RealtyTrac Vice President Daren Blomquist. Cash sales are rising from coast to coast, comprising more than half of all purchases in many metropolitan areas in the first quarter.

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In the Miami area, 67.1 percent of sales were cash deals; New York posted 57 percent; Detroit recorded 53.5 percent; Atlanta had 53.2 percent, and Las Vegas posted 52.2 percent, according to Irvine, California-based RealtyTrac.

In Manhattan, buyers are using cash for trophy apartments and to gain an advantage over borrowers who must depend on loans to finance a purchase. Pej Barlavi, owner of brokerage Barlavi Realty LLC in Manhattan, said three of his five current clients buying homes prevailed with all-cash offers.

Barlavi said two of them are hedge fund managers who used year-end bonuses to buy the properties: a $2.2 million two-bedroom apartment in Midtown, selling for $150,000 above the asking price; and $1.5 million for a one-bedroom in Tribeca. His client in the second transaction was “nudged higher by a foreign buyer” before being chosen by the seller, Barlavi said.

Foreign Buyers

“In Manhattan, you have foreign buyers coming in and using properties as a second, third, fourth or fifth home and hedging risks in their home countries,” said Chris Mayer, a real estate professor at Columbia University Business School in New York.

Private-equity firms, hedge funds and other institutional investors have spent more than $20 billion to buy as many as 200,000 rental homes in the last two years. They snapped up properties after prices fell as much as 35 percent from the 2006 peak and rental demand rose from the almost 5 million owners who went through foreclosure since 2008.

New York-based Blackstone Group LP, the biggest U.S. single-family home landlord, cut purchases by 70 percent from last year’s peak and is now concentrating on just five markets, Jonathan Gray, global head of real estate, said in a March interview. Blackstone has invested $8.5 billion since April 2012 to amass almost 44,000 rentals in 14 cities.

Strict Credit

American Homes 4 Rent and Colony American Homes, the second- and third-ranked U.S. home landlords, have also cut acquisitions as the rebound in prices requires them to raise capital or improve operations.

“As institutional investors pull back their purchasing in many markets across the country, there is still strong demand from other cash buyers, including individual investors, second-home buyers and even owner-occupant buyers,” RealtyTrac’s Blomquist said.

Banks’ stricter credit standards following the housing crash, in combination with rising mortgage rates, have put the brakes on lending. More than 40 percent of borrowers had FICO scores above 760 in 2013 compared with about 25 percent in 2001, according to Goldman Sachs Group Inc. analysts in a Feb. 20 report. The 4.22 percent average rate for a 30-year fixed mortgage on May 6 rose from 3.53 percent a year ago, following the Federal Reserve’s announced plan to taper its bond buying, according to Bankrate.com.

Wells Fargo

“The increase in all-cash purchases is partly because rates are higher than they were a year ago, so it’s made buying with a mortgage more expensive on top of home price increases,” said Jed Kolko, chief economist at real-estate information service Trulia Inc. in San Francisco.

At Wells Fargo & Co., the biggest U.S. mortgage provider, home-loan originations plunged to $36 billion in the first quarter after surpassing $100 billion for seven straight quarters ending in June 2013, according to the San Francisco-based bank. Second-ranked JPMorgan Chase & Co.’s $17 billion total in the first quarter fell below the trough in originations made during the housing crash.

First-time buyers in particular are struggling to get home loans. They comprised 30 percent of total existing-home sales in March compared with an average of 35 percent since October 2008, according to the National Association of Realtors.

Without these buyers, existing-home sales are declining. They fell 7.5 percent in March to a seasonally adjusted annual rate of 4.59 million compared with a year earlier, according to NAR. The sales volume in March remained the lowest since July 2012, according to the trade group.

“With fewer first-time buyers, you end up with more all-cash buyers and less trading up in home activity,” said Columbia’s Mayer. “To get that ecosystem working, you need to have first-time homebuyers so the trade-up purchasers can buy bigger homes.”

To contact the reporters on this story: Dan Levy in San Francisco at dlevy13@bloomberg.net; Alexis Leondis in New York at aleondis@bloomberg.net

To contact the editors responsible for this story: Vincent Bielski at vbielski@bloomberg.net; Kara Wetzel at kwetzel@bloomberg.net Rob Urban

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Forbes Coal Closes First Tranche of US$25 Million Loan Facility

TORONTO, ONTARIO–(Marketwired – Feb 5, 2014) – Forbes & Manhattan Coal Corp. (“Forbes Coal” or the “Company“) (FMC.TO)(FMC.TO) has closed on the first tranche of the previously announced secured convertible loan facility from Resource Capital Fund V L.P (“RCF“) in the aggregate principal amount of up to US$25 million (the “Facility“). The first tranche consists of a bridge loan (the “Bridge Loan“) in the amount of US$4 million. The remainder of the Facility consists of a convertible loan in the principal amount of up to US$15 million (the “Convertible Loan“), and a refinancing of the existing US$6 million convertible loan facility completed between the Company and RCF on September 6, 2013 (the “Refinancing“). The Bridge Loan is to be used for general working capital in relation to Forbes Coal’s operations in Dundee, South Africa as well as to facilitate the closing of the Company’s Toronto office.

In connection with the Bridge Loan, RCF will receive an establishment fee equal to 5% of the value of the Bridge Loan, payable in common shares in the capital of Forbes Coal (“Common Shares“), issued at a price of C$0.1446 per Common Share.

The Bridge Loan will bear interest at a rate of 15% per annum, payable each month. Interest payment obligations under the Bridge Loan may be satisfied in cash, or, at the option of RCF, through the issuance of Common Shares valued at the 20-day volume-weighted average price (“VWAP“) of the Common Shares on the Toronto Stock Exchange prior to the relevant interest payment date.

The Bridge Loan will mature on June 30, 2014, provided that if Forbes Coal receives all necessary shareholder approvals as may be required in connection with the Facility, the Bridge Loan will convert into a convertible loan with the same terms and conditions as the Convertible Loan, with the principal amount of the Bridge Loan convertible into Common Shares at a price of C$0.1446 per Common Share.

The issuance of Common Shares to RCF upon conversion of the Bridge Loan, the Convertible Loan and the Refinancing, in satisfaction of interest obligations under the Convertible Loan and the Refinancing, and in satisfaction of the establishment fee payable in connection with the Convertible Loan are subject to shareholder approval. Forbes Coal intends to seek approval of its shareholders for these issuances at a special meeting to be held no later than April 30, 2014. Pursuant to the policies of the TSX and Multilateral Instrument 61-101 – Protection of Minority Shareholder in Special Transactions (“MI 61-101“), RCF will not vote on the resolution approving the issuances of the Common Shares to RCF under the Facility.

About Forbes Coal

Forbes Coal is a growing coal producer in southern Africa. It holds a majority interest in two operating mines through its 100% interest in Forbes Coal (Pty) Ltd., a South African company which has a 70% interest in Zinoju Coal (Pty) Ltd. (“Zinoju“). Zinoju holds a 100% interest in the Magdalena bituminous mine and the Aviemore anthracite mine in South Africa. Forbes Coal has an experienced coal-focused management team.

Cautionary Notes:

This press release contains “forward-looking information” within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to, statements with respect to the Facility, the meeting to be held in connection with approval of the issuance of certain Common Shares issuable under the Facility and future financial or operating performance of Forbes Coal and its projects. Generally, forward-looking information can be identified by the use of forward-looking terminology such as “plans”, “expects” or “does not expect”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates” or “does not anticipate”, or “believes”, or variations of such words and phrases or state that certain actions, events or results “may”, “could”, “would”, “might” or “will be taken”, “occur” or “be achieved”. Forward-looking information is subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of Forbes Coal to be materially different from those expressed or implied by such forward-looking information, including but not limited to: general business, economic, competitive, foreign operations, political and social uncertainties; a history of operating losses; delay or failure to receive board or regulatory approvals; timing and availability of external financing on acceptable terms; not realizing on the potential benefits of the proposed transaction; conclusions of economic evaluations; changes in project parameters as plans continue to be refined; future prices of mineral products; failure of plant, equipment or processes to operate as anticipated; accidents, labour disputes and other risks of the mining industry; and, delays in obtaining governmental approvals or required financing or in the completion of activities. Although Forbes Coal has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

Commodity MarketsCompany Earningsbridge loan Contact:

Forbes & Manhattan Coal Corp.

Craig Wiggill

Executive Chairman and Interim CEO

+27 11 656 3206

crwiggill@gmail.com

Forbes & Manhattan Coal Corp.

Sarah Williams

Chief Financial Officer

swilliams@forbescoal.com
www.forbescoal.com […]

New York Loan Company Offers Collateral Loans to Dealers in the Trade at Discounted Rates

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New York Loan – 47th Street

We strongly value the relationships that we develop with our loyal clients and dealers in the trade, and appreciate nothing more than a new client visiting based on the recommendation of an existing client.

(PRWEB) January 10, 2014

New York Loan Company, on the third floor of the state-of-the-art International Gem Tower at 50 West 47th Street, opened for business last year providing confidential collateral loans against diamonds, gold, jewelry, luxury watches and contemporary art. It is the sister operation to Beverly Loan Company, which has been the premier collateral lender in Beverly Hills since 1938 and is commonly referred to as the “Pawnshop to the Stars”.

New York Loan Company now formally offers pawn loans to those in the jewelry business, specifically dealers in the Diamond District, who often require a short-term confidential cash infusion. Dealers in the trade, who are keenly aware of the value of their goods, undoubtedly appreciate New York Loan Company’s secure location, private offices, and GIA trained loan officers, all of which ensure a discreet, safe and professional experience.

Tabach-Bank’s family business understands how capital intensive the jewelry industry can be and offers deeply discounted interest rates to dealers that can present a jewelry resale license. “We appreciate and value the dealers who make 47th Street thrive and we are here to offer them a discreet and safe way to pledge their diamonds, jewelry and watches for quick cash in a matter of minutes at a rate far below market,” said Tabach-Bank. New York Loan Company is also unique in its ability to make the largest pawn loans on 47th Street, even seven-figures.

Prior to opening in Manhattan’s Diamond District, Jordan Tabach-Bank, the companies’ owner and CEO, had several clients, including diamond dealers and jewelry manufacturers, who would fly across the country to Beverly Hills to take advantage of his niche upscale collateral lending business. Recognizing the demand for an East Coast location with expertise in loaning to the trade, he was amongst the first to purchase space in the International Gem Tower.

Word of mouth recommendations have been the primary source of New York Loan Company’s growing customer base. Those dealers in the trade who do not require a loan likely know others who do and have the opportunity to profit from New York Loan Company’s affiliate referral program. New York Loan Company has already paid tens of thousands of dollars in referral fees for loans against high value goods, including GIA certified diamonds, Cartier art deco jewelry, Rolex watches, and even original artwork by Andy Warhol.

“We strongly value the relationships that we develop with our loyal clients and dealers in the trade, and appreciate nothing more than a new client visiting based on the recommendation of an existing client, which is why we’ve always encouraged the practice by offering generous referral fees,” explained Tabach-Bank.


[…]

Forbes Coal Secures an Offer of Up to US$19.0 Million Loan Facility

TORONTO, ONTARIO–(Marketwired – Dec 31, 2013) – Forbes & Manhattan Coal Corp. (FMC.TO)(FMC.TO) (“Forbes Coal” or “the Company”) has secured the offer of a significant funding package by Resource Capital Fund V L.P (“RCF“) into the Company, comprising up to a total of up to US$19.0 million (the “Transaction“).

This funding package is comprised of a bridge loan of US$4.0 million (the “Bridge Loan“) and a convertible loan of up to US$15.0 million (the “Convertible Loan“).

Bridge Loan

The Bridge Loan facility is to be used for general working capital in relation to Forbes Coal’s operations in Dundee, South Africa as well as to facilitate the closing of the Company’s Toronto office.

The Company will incur a 5% establishment fee in connection with the Bridge Loan and the Bridge Loan will bear interest at a rate of 15% per annum, payable in arrears at the end of each calendar quarter. Subject to receipt of shareholder approval or an exemption therefrom, the establishment fee will be payable in common shares of Forbes Coal at a price of C$0.14 per share and interest payments will be payable in cash or common shares of Forbes Coal at a price per share equal to the 20-day VWAP as at the date the payment is due. The Bridge Loan will mature on June 30, 2014, provided that if Forbes Coal receives all necessary regulatory and/or shareholder approvals, as may be required, the Bridge Loan will convert into a convertible loan with the same terms and conditions as the Convertible Loan.

Payment of the establishment fees and interest to RCF in connection with the Bridge Loan and the Convertible Loan (described below) in cash or common shares of Forbes Coal, and the conversion of the principal amount of the Bridge Loan or the Convertible Loan into common shares of Forbes Coal is subject to shareholder approval pursuant to the policies of the Toronto Stock Exchange (the “TSX”). Forbes Coal will be making an application to the TSX to rely on the financial hardship exemption in connection with such payments and share issuances. Reliance on the financial hardship exemption will be subject to TSX approval.

Convertible Loan

The Convertible Loan facility is to be used to provide further funds for general working capital which will allow the Company to enact strategies to improve its operations in Dundee, South Africa as well as to provide for further capital investment. Subject to receipt of shareholder approval or an exemption therefrom, the Convertible Loan is convertible into common shares of Forbes Coal at a price of C$0.14 per common share.

The Company will incur a 5% establishment fee based on the amount drawn under the Convertible Loan, and the Convertible Loan will bear interest at a rate of 12% per annum, payable in arrears at the end of each calendar quarter. Subject to receipt of shareholder approval or an exemption therefrom, the establishment fee will be payable in cash or common shares of Forbes Coal at a price of C$0.14 per share and interest payments will be payable in cash or common shares at a price per share equal to the 20-day VWAP as at the date the payment is due.

The Convertible Loan matures on June 30, 2017.

Subject to receipt of shareholder approval, the existing RCF US$6.0 million convertible loan which closed on September 4, 2013 will be amended to contain the same terms and conditions as the Convertible Loan. As a result and upon conversion of the Bridge Loan, Forbes Coal will enter into a convertible loan facility with RCF for an aggregate amount up to US$25 million (which will include the Convertible Loan).

In the event that TSX approval for the financial hardship exemption is not received for all or part of the transactions contemplated by the Bridge Loan or the Convertible Loan, Forbes Coal will call and hold a special shareholder meeting to approve such transactions and the amendment of the terms of the current US$6 million convertible loan facility. Further details of the shareholder meeting will be announced in due course.

Forbes Coal is also considering a non-underwritten pro-rata entitlement offer to existing shareholders for gross proceeds of up to $5 million. The offer remains subject to receipt of regulatory approval and if required, shareholder approval.

The Transaction is a related party transaction under MI 61-101 and will be subject to minority shareholder approval in accordance with section 5.6 of MI 61-101. Forbes Coal will be relying on the valuation exemption set forth is section 5.5(c) of MI 61-101. Forbes Coal does not have knowledge of any material information concerning Forbes Coal or its securities that has not been generally disclosed. Neither Forbes Coal nor any of its officers or directors, after reasonable inquiry, are aware of any prior valuations that have been completed in the past 24 months. RCF currently owns 7,551,516 (21.5%) of the issued and outstanding common shares of Forbes Coal on a non-dilutive basis. Assuming an exchange rate of C$1.00 = US$1.00, if RCF converts the entire amount of the Bridge Loan and Convertible Loan and chooses to receive the relevant establishment fees in common shares, RCF will be issued an aggregate of 142,500,000 common shares, which would result in RCF holding an aggregate of 150,051,516 (81%) of the issued and outstanding common shares of Forbes Coal.

If the full amount of the Convertible Loan is issued and RCF chooses to receive all interest payments under the Transaction in common shares, assuming a conversion price of $0.16 (being the 20 day VWAP as of December 27, 2013), RCF will be issued an additional 46,105,480 common shares, which, along with the shares received by RCF if it converts the entire amount of the Bridge Loan and Convertible Loan and chooses to receive the establishment fees in common shares, would result in RCF holding an aggregate of 196,156,996 (85%) of the issued and outstanding common shares of Forbes Coal.

If the full amount of the Convertible Loan is issued and RCF chooses to receive all interest payments under the Transaction in cash, the Convertible Loan and the Bridge Loan are outstanding until maturity and Forbes Coal receives the requisite shareholder approvals, a total of $7,376,876 of interest would be paid. Pursuant to the Transaction RCF will have the right to participate in any future financings by Forbes Coal on a pro rata basis to its partially diluted shareholdings.

In addition, provided that RCF holds common shares or the right to acquire common shares equal to at least 10% of the issued and outstanding common shares, RCF will have the right to nominate one individual to the board of directors. If RCF holds common shares or the right to acquire common shares equal to at least 30% of the issued and outstanding common shares, RCF will have the right to nominate two individuals to the board of directors. If RCF holds common shares or the right to acquire common shares equal to at least 50% of the issued and outstanding common shares, RCF will have the right to nominate three individuals to the board of directors.

The Transaction is subject to, inter alia, completion of definitive agreements, approval by Forbes Coal’s senior lender, the successful closure of the Toronto office of Forbes Coal, negotiations with certain creditors and regulatory approvals, including without limitation, Toronto Stock Exchange approval and approval of the South African Reserve Bank. The Bridge Loan is expected to close on or around January 31, 2014. The Convertible Loan is expected to close on or around April 30, 2014.

Corporate Structure

Upon successful completion of the Transaction, and subject to certain other conditions, Mssrs. Stan Bharti and Stephan Theron will step down as directors of Forbes Coal. Following closing of the Transaction it is anticipated that Mr. Theron, Ms. Deborah Battiston and Mr. Neil Said will resign their management positions with Forbes Coal. Following his resignation, Mr. Theron will remain a special advisor to the Company.

Mr. Craig Wiggill will assume an interim role of Executive Chairman from closing of the Transaction until the date of shareholder approval. Mr. Malcolm Campbell will be appointed as Chief Executive Officer of the Company from the date of shareholder approval, and Ms. Sarah Williams will be appointed as Chief Financial Officer from closing of the Transaction.

In addition, the Company is also in discussions with its senior lender regarding a restructuring of its debt facilities, and will be implementing a rebranding strategy, including a change of name, subject to shareholder approval, further details of which will be announced in due course.

About Forbes Coal

Forbes Coal is a coal producer in southern Africa. It holds a majority interest in two operating mines through its 100% interest in Forbes Coal (Pty) Ltd., a South African company which has a 70% interest in Zinoju Coal (Pty) Ltd. (“Zinoju“). Zinoju holds a 100% interest in the Magdalena bituminous mine and the Aviemore anthracite mine in South Africa. Forbes Coal has an experienced coal-focused management team.

Cautionary Notes:

This press release contains “forward-looking information” within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to, statements with respect to the Transaction with RCF, references to the private placement and future financial or operating performance of Forbes Coal and its projects. Generally, forward-looking information can be identified by the use of forward-looking terminology such as “plans”, “expects” or “does not expect”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates” or “does not anticipate”, or “believes”, or variations of such words and phrases or state that certain actions, events or results “may”, “could”, “would”, “might” or “will be taken”, “occur” or “be achieved”. Forward-looking information is subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of Forbes Coal to be materially different from those expressed or implied by such forward-looking information, including but not limited to: general business, economic, competitive, foreign operations, political and social uncertainties; a history of operating losses; delay or failure to receive board or regulatory approvals; timing and availability of external financing on acceptable terms; not realizing on the potential benefits of the proposed transaction; conclusions of economic evaluations; changes in project parameters as plans continue to be refined; future prices of mineral products; failure of plant, equipment or processes to operate as anticipated; accidents, labour disputes and other risks of the mining industry; and, delays in obtaining governmental approvals or required financing or in the completion of activities. Although Forbes Coal has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

Contact:

Forbes & Manhattan Coal Corp.

Stephan Theron

President and Chief Executive Officer

+1 (416) 861-5912

stheron@forbescoal.com

Forbes & Manhattan Coal Corp.

Sarah Williams

Vice President – Finance

+27 11 656 3206

swilliams@forbescoal.com

Forbes & Manhattan Coal Corp.

Craig Wiggill

Chairman

crwiggill@gmail.com
www.forbescoal.com […]

Cash-Rich Retirees Struggle to Get Loans

Retirees trying to obtain a mortgage may find that a pristine credit history and healthy retirement accounts are not enough. Lenders are also looking for a consistent monthly income in line with their usual debt-to-income standards.

Sanford Evans, 75, ran up against this requirement recently when he applied for a $174,000 loan to finance the purchase of an apartment in the Riverdale section of the Bronx. With brokerage accounts exceeding $1 million, a TransUnion credit score of 822, and the ability to make a 40 percent down payment, Mr. Evans didn’t anticipate any problem with qualifying.

“I would have paid cash,” he said, “but the interest rates are so low it didn’t make financial sense to do it. I figured this was going to be as easy as it’s been in the past.”

But despite the loan officer’s initial assurances that the loan would close quickly, Mr. Evans, who was moving from a condo in Boston, endured delays that dragged on for months.

The problem, he was told, was his income. He received Social Security and monthly dividend distributions, and supplemented these earnings with part-time medical writing for a Boston hospital. Yet he still came up short. The lender wouldn’t count the writing income because he was moving away from Boston.

This made no sense to Mr. Evans, given the size of his brokerage accounts. “Having a job does not give you any more security than having the assets that I have,” he said.

Most lenders, though, measure income the same way, said Richard Pisnoy, a principal of the Silver Fin Capital Group, a brokerage in Great Neck. When they look at dividends, they want to see a regular annual amount on the tax return paid out over at least the last two years. As far as part-time work, when the borrower applies, “they need to be able to confirm you’re actually employed at that moment,” he said. They will then credit income shown, but may require a two-year work history.

Social Security income is always counted. Borrowers should be aware that Fannie Mae guidelines allow lenders to increase that income by 25 percent if the beneficiary isn’t paying taxes on it, Mr. Pisnoy said.

John Prom, the Manhattan branch manager for Real Estate Mortgage Network, offers other tips on coping with the income requirement. A couple of portfolio lenders are still issuing loans without verifying income, he said, but their interest rates are a little higher. So are down payments, at 30 to 40 percent.

In addition, some lenders qualify income-deficient, asset-rich retirees by using a program known as asset depletion.

“They take a fraction of your assets, amortize it and apply it as income,” Mr. Prom said.

Asset depletion was ultimately the strategy used by Sterling National Bank to qualify Mr. Evans, according to Tony Jao, a regional sales manager.

But by the time Sterling was ready to close, Mr. Evans had grown so frustrated that he had applied to a second bank, HSBC. It interpreted his income differently, given that he could work remotely, and approved his loan in four weeks. He ultimately took his business there.

Mr. Evans says the application process wouldn’t have irked him so had he known what to expect. “I was in the advertising business for 40 years,” he said, “and the rule was always underpromise and overperform. That’s what part of the problem was here.”

[…]