GE Commercial anticipates resurgence in DIP, exit-financing market, hires new MD

By Jennifer Lanning Drey

Eugene, Ore., May 19 - GE Commercial Finance's addition of Brent Hazzard to its restructuring finance team represents, in part, the company's expectation of an upcoming market-wide increase in opportunities to provide debtor-in-possession and exit financing facilities, said Rob McMahon, managing director and team leader for restructuring finance at GE, in a telephone interview on Friday.

Hazzard, who will serve as managing director, will fill a gap left by employee attrition at the beginning of the year, as well as help the five-year-old restructure finance team maintain its position in the market in the future, according to McMahon.

As managing director, Hazzard will originate DIP, plan of reorganization and out-of-court financing with turnaround and restructuring managers located throughout the Northeast.

"We've been a leader in the market for the last few years, and we want to do what we can to maintain our leadership," McMahon said. "It seems to be the consensus of many people that the credit cycle, once it runs its course, will result in a significant resurgence of this activity."

"We are seeing multiples at their all-time high, pricing and spread has come down considerably, and there's also a tremendous amount of loosening in underwriting criteria going on in the market, all of which seems to indicate that there will be a near-term, medium-term downturn, which will result in a good deal of activity."

Despite the current lower-than-average default rate levels and corresponding depressed level of restructuring activity, GE Commercial completed $2.3 billion in transactions in the first quarter, which included deals for US Airways Group, Inc., Pliant Corp. and J.L. French Automotive Castings Inc., and was up from $479 million in the first three months of 2005 due to several large airline deals.

"Two of the more recent trends over the last 12 months in filings have been the airline industry and automotive sector, and through affiliates, internal groups at GE, we have a great deal of experience in both of those sectors and are able to leverage that and give customers a great deal of confidence that we understand their needs and can help address them," said McMahon.

GE Commercial's competition in the restructure finance market currently includes hedge funds, from which McMahon said the company works to differentiate itself.

"The hedge funds, some of them, have a vulture-type mentality, which a lot of our borrowers are concerned about because at their most vulnerable time, bankruptcy, they generally don't want to be inviting folks in who have a large motive."

GE Commercial's restructuring finance team has 18 members. Hazzard, its newest addition, previously served as senior vice president on the distressed debt team for GE Bank Loans.

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