Notice of Sale of Business and Disaster Assistance Loans

AGENCY:

Small Business Administration.

ACTION:

Notice of Sale of Business and Disaster Assistance Loans—Loan Sale #3.

SUMMARY:

This notice announces the Small Business Administration's (“SBA”) intention to sell approximately 19,200 secured and unsecured business and disaster assistance loans, (collectively referred to as the “Loans”). This is SBA's third sale in its Asset Sales Program and the second sale that includes disaster assistance loans, which includes both business and consumer loans. The total unpaid principal balance of the Loans is approximately $1.15 billion (U.S.). SBA previously guaranteed some of the Loans under various sections of the Small Business Act, as amended, 15 U.S.C. 631 et seq. or the Small Business Investment Act, as amended, 15 U.S.C. 695 et seq. Any SBA guarantees that might have existed at one time have been paid and no SBA guaranty is available to the successful bidders in this sale. The majority of the loans were originated from and are serviced by SBA. The collateral for the secured Loans includes commercial and residential real estate and other businesses and personal property located nationwide. This notice also summarizes the bidding process for the Loans.

DATES:

The Bidder Information Package will be available to qualified bidders beginning on or about October 3, 2000. The Bid Date is scheduled for December 5, 2000, and closings are scheduled to occur between December 15, 2000 and December 29, 2000. These dates are subject to change at SBA's discretion.

ADDRESSES:

Bidder Information Packages will be available to qualified bidders from SBA's Transaction Financial Advisor, Hanover Capital Partners Ltd. (“Hanover”). Bidder Information Packages will only be made available to parties that have submitted a completed Confidentiality Agreement and Bidder Qualification Statement and have demonstrated that they are qualified bidders. The Confidentiality Agreement and Bidder Qualification Statement are available on the SBA Website at www.sba.gov/assets/sale3.html or by calling (877) 457-6754. The completed Confidentiality and Bidder Qualification Statement should be sent to the attention of Kathryn Merk, SBA Loan Sale 3, by fax, at (732) 572-5959 and mailed, to Hanover Capital Partners Ltd., 100 Metroplex Drive, Suite 301, Edison, NJ 08817.

The Due Diligence Facility is scheduled to open on or about October 3, 2000 and close on or about December 4, 2000. These dates are subject to change at SBA's discretion.

FOR FURTHER INFORMATION CONTACT:

Margaret L. Hawley, Program Manager, Small Business Administration, 409 Third Street, SW, Washington, DC 20416; 202-401-8234. This is not a toll free number. Hearing or speech-impaired individuals may access this number via TDD/TTY by calling the Federal Information Relay Service's toll-free number at 1-800-877-8339.

SUPPLEMENTARY INFORMATION:

SBA intends to sell approximately 19,200 secured and unsecured business and disaster assistance loans, collectively referred to as the “Loans”. The Loans include performing, sub-performing and non-performing loans. The Loans will be offered to qualified bidders in loan pools that will be based on such factors as performance status, collateral status, collateral type and geographic location of the collateral. A list of the Loans, loan pools and pool descriptions is contained in the Bidder Information Package. SBA will offer interested persons an opportunity to bid competitively on loan pools, subject to conditions set forth in the Bidder Information Package. SBA shall use its sole discretion to evaluate and determine winning bids. No loans will be sold individually. The Loans to be sold are located throughout the United States as well as Puerto Rico, U.S. Virgin Islands, Guam and other Pacific Islands.

The Bidding Process

To ensure a uniform and fair competitive bidding process, the terms of sale are not subject to negotiation. SBA will describe in detail the procedure for bidding on the Loans in the Bidder Information Package, which will include bid forms, a non-negotiable loan sale agreement prepared by SBA (“Loan Sale Agreement”), specific bid instructions, as well as pertinent loan information by loan pool such as total outstanding unpaid principal balance, interest rate, remaining term, loan to value, aggregate payment history and collateral information including geographic location and type. The Bidder Information Package also includes CD-ROMs that contain information pertaining to the Loans.

The Bidder Information Package will be available approximately 9 weeks prior to the Bid Date. It will contain procedures for obtaining supplemental information about the Loans. Any interested party may request a copy of the Bidder Information Package by sending a written request together with a duly executed copy of the Confidentiality Agreement and a Bidder Qualification Statement to the address specified in the ADDRESSES section of this notice.

Prior to the Bid Date, one or more Bidder Information Package Supplements will be mailed to all recipients of the original Bidder Information Package. The final list of loans included in Sale #3 will be contained in a Bidder Information Package Supplement as well as any final instructions for the sale.

Deposit and Liquidated Damages

Each bidder must include with its bid a deposit equal to 10 percent of the amount of the bidder's highest bid. If a successful bidder fails to close in accordance with the terms of the Loan Sale Agreement, SBA shall retain the deposit as liquidated damages.

Due Diligence Facility

A bidder due diligence period will commence on or about October 3, 2000. During the bidder due diligence period, a non-refundable assessment of $1,000 US (the Due Diligence Assessment) entitles qualified bidders to receive the Due Diligence CD-ROM, and enables qualifed bidders to access an imaged database of file documents relating to the Loans (“Asset Review Files”) either off-site electronically, by visiting SBA's Due Diligence Facility, or both. Alternatively, for a non-refundable assessment of $500 US, qualified bidders may review the Asset Review Files by visiting the Due Diligence Facility located at 499 South Capital, SW, Suite 300, Washington, DC 20003. Bidders that have paid the due diligence assessment of $500 US will also receive the Due Diligence CD-ROM that contains due diligence materials such as loan payment history and updated third party reports.

Specific instructions for accessing information in electronic format or making an appointment to visit the Due Diligence Facility are included in the Bidder Information Package.

SBA Reservation of Rights

SBA reserves the right to remove loans from the sale at any time prior to the Bid Date, and add loans prior to the Cut-Off Date for any reason and without prejudice to its right to include any loans in a later sale. SBA also reserves the right to terminate this sale at any time prior to the Bid Date.

SBA reserves the right to use its sole discretion to evaluate and determine winning bids. SBA also reserves the right in its sole discretion and for any reason whatsoever to reject any and all bids.

SBA reserves the right to conduct a “best and final” round of bidding wherein bidders will be given the opportunity to increase their bids. A best and final round shall not be construed as a rejection of any bid or preclude SBA from accepting any bid made by a bidder.

Ineligible Bidders

The following individuals and entities (either alone or in combination with others) are ineligible to bid on the Loans included in the sale:

(1) Any employee of SBA, any member of any such employee's household and any entity controlled by an SBA employee or by a member of such employee's household.

(2) Any individual or entity that is debarred or suspended from doing business with SBA or any other agency of the United States Government.

(3) Any contractor, subcontractor, consultant, and/or advisor (including any agent, employee, partner, director, principal, or affiliate of any of the foregoing) who will perform or has performed services for, or on-behalf of, SBA, either in connection with the Loans, this sale or the development of SBA's Asset Loan Sales Program.

(4) Any individual who was an employee, partner, director, agent or principal of any entity, or individual described in paragraph (3) above at any time during which the entity or individual performed services for, or on behalf of, SBA, either in connection with the Loans, with this sale or the development of SBA's Asset Sales Program.

(5) Any individual or entity that has used or will use the services, directly or indirectly, of any person or entity ineligible under any of paragraphs (1) through (4) above to assist in the preparation of any bid in connection with this sale.

Loan Sale Procedure

SBA plans to use a competitive sealed bid process as the method to sell the Loans. SBA believes this method of sale optimizes the return on the sale of Loans and attracts the largest field of interested parties. This method also provides the quickest and most efficient vehicle for the SBA to dispose of the Loans.

Post Sale Servicing Requirements

The Loans will be sold servicing released. Purchasers of the Loans and their successors and assigns will be required to service the Loans in accordance with the applicable provisions of the Loan Sale Agreement for the life of the Loans. In addition, the Loan Sale Agreement establishes certain requirements that a servicer must satisfy in order to service the Loans.

Scope of Notice

This notice applies to SBA Sale #3 and does not establish agency procedures and policies for other loan sales. If there are any conflicts between this Notice and the Bidder Information Package, the Bidder Information Package shall prevail.