Alcatel and Citibank Expand Securitization Vehicle

Alcatel and Citibank have expanded Alcatel's securitization vehicle, further solidifying Alcatel's commitment to global vendor financing. The vehicle, established in May 1999, is now the world's largest, with SVF 1999-A Trust, a Delaware entity, authorized to purchase up to $1.2 billion of vendor finance loans and commitments. This expansion will enable Alcatel to support growth in equipment sales, enhancing returns to shareholders and reducing risk. The off-balance sheet sale of long-term loan assets will improve corporate liquidity and free up capital for other productive uses.

Key Takeaways:

• Alcatel's securitization vehicle, SVF 1999-A Trust, is now the world's largest, with a purchasing capacity of up to $1.2 billion.
• The vehicle will enable Alcatel to support growth in equipment sales, enhancing returns to shareholders and reducing risk.
• The off-balance sheet sale of long-term loan assets will improve corporate liquidity and free up capital for other productive uses.
• Eligible loans include those between $1 million and $120 million from over 110 countries on 6 continents.
• Loans may be made to telecom, satellite, and submarine cable operators who purchase equipment from Alcatel.
• The program enables Alcatel to use a portfolio approach and securitization and leasing technology to transfer interests in loans from a broader spectrum of credit exposures.
• Investors will purchase a higher-rated security than if they purchased individual interests in each loan.
• The deal team included members based in Paris, New York, and London and drew on the expertise of Citibank's Global Asset Finance Group, Global Securitization Group, Global Media and Communication team, and Citibank/Schroder Salomon Smith Barney's global loan syndication business.

Statistics:

• Alcatel expects to use the securitization program to support growth in equipment sales.
• The securitization vehicle will have a purchasing capacity of up to $1.2 billion.
• Eligible loans will include those between $1 million and $120 million from over 110 countries on 6 continents.
• The program will enable Alcatel to use a portfolio approach and securitization and leasing technology to transfer interests in loans from a broader spectrum of credit exposures.

Sources:

• BUSINESS WIRE, "Alcatel and Citibank Announce Expansion of Alcatel's Securitization Vehicle," October 10, 2000.
• Business Wire. Retrieved from http://www.businesswire.com/cgi-bin/mnws.cgi?id=134183
• About Alcatel. Retrieved from http://www.alcatel.com
• About Citigroup. Retrieved from http://www.Citigroup.com