[Federal Register Volume 67, Number 12 (Thursday, January 17, 2002)]
[Notices]
[Pages 2475-2477]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-1265]


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SMALL BUSINESS ADMINISTRATION


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 #5.

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SUMMARY: This notice announces the Small Business Administration's 
(``SBA'') intention to sell approximately 30,000 secured and unsecured 
business and disaster assistance loans, (collectively referred to as 
the ``Loans''). The total unpaid principal balance of the Loans is 
approximately $620 million. This is the fifth sale of loans originated 
under the SBA's Business Loan Programs and the fourth sale of Disaster 
Assistance Loans (both business and consumer loans). SBA previously 
guaranteed some of the Loans under various sections of 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 by and are serviced by SBA. The 
collateral for the secured Loans includes commercial and residential 
real estate and other business and personal property located 
nationwide. This notice also summarizes the bidding process for the 
Loans.

DATES: The Bidder Information Package became available to qualified 
bidders on October 25, 2001. The Bid Date is scheduled for January 15, 
2002, and closings are scheduled to occur between January 22, 2002 and 
February 15, 2002. These dates are subject to change at SBA's 
discretion.

ADDRESSES: Bidder Information Packages will be available from the SBA's 
Transaction Financial Advisor, KPMG Consulting, Inc. (``KPMG'') and its 
subcontractor, 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 Bidders Qualification 
Statement are available on the SBA Web site at http://www.sba.gov/
assets/current__sale/sale5.html or by calling the SBA Loan Sale #5 
Center toll-free at Hanover at (888) 737-3840. The completed 
Confidentiality and Bidder Qualification Statement can be sent to the 
attention of Kathryn Merk, SBA Loan Sale #5, by either fax, at (732) 
572-5959 or by mail, to Hanover Capital Partners, Ltd., 100 Metroplex 
Drive, Suite 301, Edison, NJ 08817.
    The Due Diligence Facility opened October 29, 2001 and will close 
January 14, 2002. These dates are subject to change at SBA's 
discretion.

FOR FURTHER INFORMATION CONTACT: Margaret L. Hawley, Program Manager,

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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 30,000 
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 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 such as total outstanding unpaid principal balance, 
interest rate, maturity term, 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 became available approximately 10 
weeks prior to the Bid Date. It contains 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, a Bidder Information Package Supplement will 
be mailed to all recipients of the original Bidder Information Package. 
It will contain the final list of loans included in Sale #5 and 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 abide by the terms of the Loan 
Sale Agreement, including paying SBA any remaining sums due pursuant to 
the Loan Sale Agreement and closing within the time period specified in 
the Loan Sale Agreement, SBA shall retain the deposit as liquidated 
damages.
    Due Diligence Facility: The bidder due diligence period began 
October 29, 2001. During the bidder due diligence period, qualified 
bidders may, for a non-refundable assessment of $500 US dollars, review 
all asset file documents that have been imaged onto a database by 
visiting the due diligence facility located at 1050 Connecticut Avenue, 
NW., 8th Floor, Washington, DC 20036 and/or via remote access. Bidders 
that have paid the due diligence assessment of $500 US dollars may also 
request CD-ROMs that contain substantial due diligence materials such 
as loan payment history and updated third party reports.
    Specific instructions for ordering information in electronic format 
or making an appointment to visit the due diligence facility are 
included in the SBA Loan Sale5 Web site (http://www.sba.gov/assets/
current__sale/sale5.html) and the Bidder Information Package.
    SBA Reservation of Rights: SBA reserves the right to remove loans 
from the sale at any time prior to the Closing 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. After the Cut-Off Date, SBA 
will retain any loan that meets the following criteria: (1) The obligor 
makes a payment that fully satisfies his/her obligation; (2) Seller 
cannot provide any Evidence of Indebtedness; (3) Seller does not own, 
control or have the right to transfer the Loan; (4) A pending or 
threatened suit, action, arbitration, investigation or proceeding which 
could affect the Seller in an unacceptable manner; and (5) Loan is 
inextricably related to another asset, claim, right of action that is 
retained by the Seller.
    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.
    SBA reserves the right to sell less than 100 percent of the Loans 
offered for sale and ``re-offer'' the remaining loans subsequent to the 
initial bid.
    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 a 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 this sale 
or the development of SBA's loan sale program.
    (4) Any individual that 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 this sale 
or the development of SBA's loan sale 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 online closed 
bid auction process as the method to sell the majority of the Loans. 
SBA also plans to offer eight designated pools of loans in an open E-
cry on line auction format. SBA believes an auction sale optimizes the 
return on the sale of Loans and attracts the largest field of 
interested parties. A competitive bid auction 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

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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 Loan Sale Number #5 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.

LeAnn M. Oliver,
Deputy Associate Administrator for Financial Assistance.
[FR Doc. 02-1265 Filed 1-16-02; 8:45 am]
BILLING CODE 8025-01-P