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WELLS FARGO FOOTHILL

WELLS FARGO FOOTHILL . M&A Discussion for Kuhn Capital Chicago 2/12/04. Wells Fargo Foothill History. Founded 1970 Rapid Growth in 1970s Became NYSE Traded 1987 1990’s: Ability to tap Public Debt Markets which helped Foothill develop its focus of today Acquired by Norwest October, 1995

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WELLS FARGO FOOTHILL

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  1. WELLS FARGO FOOTHILL M&A Discussion for Kuhn Capital Chicago 2/12/04

  2. Wells Fargo Foothill History • Founded 1970 • Rapid Growth in 1970s • Became NYSE Traded 1987 • 1990’s: Ability to tap Public Debt Markets which helped Foothill develop its focus of today • Acquired by Norwest October, 1995 • ~$775 million of assets at time of sale • Norwest + Wells Fargo in 1998 • Today~$9 billion of assets through 4 units

  3. Business Units • Four Business Units • Business Finance Division: Focuses on manufacturing, distribution, SOFTWARE AND TECHNOLOGY; traditional asset based loans (plus underwriting of enterprise valuation “B” pieces. • Wells Fargo Retail Finance: Focuses on retailers only • Foothill Wholesale Finance: Focuses on lending to other lenders, or wholesale lines of credit. • Foothill Specialty Finance: Lending to non traditional asset based customers, such as hotel/casino, media,and pure cash flow businesses.

  4. Business Finance Division • Los Angeles Headquarters - Offices Nationwide • New York, Chicago, Boston, Atlanta, Dallas, San Francisco • $500 Million Underwriting capability, $30-$50 Million Typical Hold; good syndication network. • Over 550 Accounts • Pricing Parameters • Interest Rates: Libor +1.75%…and up…and up... • Closing Fees: 0.50% to 2.00% of the Credit Line • Unused Line Fees and Collateral Service Fees • It may look like a lot… but you may get the Wells Fargo Foothill putter and other assorted gifts

  5. What we focus on in technology lending…. • Collateral Coverage/Exit Strategy • Must Have “Running Room” at Closing • Need to Have a Reasonable Plan (Aid by third party consultants is a benefit) • Competent Management that Communicates effectively • Recurring Revenue, Install Base of Customers

  6. Strategic Partnerships • Subordinated Debt Lenders such as Cerberus Partners, Highbridge/Zwirn, and Goldman Sachs Credit Partners • Equity Sponsors such as Windpoint, GTCR Platinum/Gores, Cypress Funds, and Deutsche Bank Private Equity Wells Fargo Partnerships (banking needs)

  7. How do we lend to software companies? • Our financing packages leverage a Borrower’s assets to provide liquidity based on advances against: • A/R: up to 85%, • Recurring Revenue, install base, and retention rates. • We are typically effective for established operating companies facing a re-capitalization, acquisition financing, new buyout because of the leverage that we can provide.

  8. Recent Deals • SPSS, Inc. (Database Software company) • $30MM Loan supported by the install base of customers and on-going monthly fees. • Norstan, Inc. (IP/telephony installation business) • $27.5MM Refinance Revolver supported by maintnence contracts-recurring revenue fees. • The Learning Company • $50MM Leveraged acquisition line of credit partnering with Gores Technology Partners • Palm Computing • $150MM refinance Line of Credit

  9. Conclusion • Questions/Comments • Party Favours • Golf balls • Golf Shirts • Radio/TV • Can you get the A+ gift this holiday season? • Run a deal by us……

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