Capital Markets Alternatives forLeasing Companies

Jim MurrayManaging Director, Financial Institutions

Houlihan Lokey

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Typical Capital Structures

_________ _________ _________

2005 2010 2005 2010

(as a % of total assets)

Short Term Debt 18% 11% 23% 28% (1)

Long Term Debt 58

57 53 78

Other Liabilities 4 6 13 8

Common Equity 20 26 11 15

(1) Consists of deposits at CIT Bank

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Valuation of Leasing Companies

.00x

.50x

1.00x

1.50x

2.00x

2.50x

Apr-05 Sep-05 Feb-06 Jul-06 Dec-06 May-07 Oct-07 Mar-08 Aug-08 Jan-09 Jun-09 Nov-09 Mar-10

Price / Book Value

Price / LTM Earnings

.00x

5.00x

10.00x

15.00x

20.00x

25.00x

Apr-05 Sep-05 Feb-06 Jul-06 Dec-06 May-07 Oct-07 Mar-08 Aug-08 Jan-09 Jun-09 Nov-09 Mar-10

Mean: 1.48x

Mean: 13.0x

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Typical Terms in Today’s Market

Senior Secured Lines / CP Conduits

Advance Rate: 80 – 85%Interest Rate: L + 300 – 450

Subordinated Secured Lines

Advance Rate: 6-10% above advance on senior lineInterest Rate: L + 1000

Unsecured Term Debt

Rated Unrated

Maturity:5 year

Coupon: L + 325 (BB)L + 400 (B)

1-3 years

Mid to High Teens

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Public Equity

Public equity markets have reopened for small cap/micro cap finance companies, although no leasing companies have yet gone public in 2009/2010

SeaCube Container filed a $165 million IPO on March 29, 2010

Typical IPO characteristics, historically:

Market capitalization: $250 million or more Publicly traded float: $75 million or more

6

Capital Markets - Near Term Outlook

Credit markets should continue to evolve favorably

Banks beginning to seek new clients for secured lines Unsecured credit markets seeking new issuers Renewal of securitization market possible, but timing uncertain

Equity is once again a key consideration

Back to the traditional “chicken and egg” situation But that’s better than “no chickens and no eggs”

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Private Equity

Private equity can be a stepping stone to:

An initial public offering A sale of control

A number of private equity firms have experience in making minority investments in leasing companies, such as:

Falfurrias Capital Partners (Commercial Credit Group) CIVC Partners (Partners Equity Capital Co.) Warburg Pincus (Charter Financial)

Minority private equity investors:

Typically seek 30% or less ownership in a portfolio company May make investments ranging from $15 million to in excess of

$100 million