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Post# of 87366
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neilhk

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neilhk

Re: None

Saturday, 10/20/2007 2:16:51 AM

Saturday, October 20, 2007 2:16:51 AM

Post# of 87366
Conduit Lender/ Funding Source

I think the conduit lender has been working in the background for sometime.

1. Firstly, back in the PR of 20th June 2007, they stated changes to the BCLOC Program to include a BCLOC Promissory Note.

http://heritagecapitalcreditcorp.com/sitebuildercontent/sitebuilderfiles/hcccprovidesupdates.pdf

• Revised BCLOC Program

The BCLOC Program has been enhanced to include a “BCLOC Promissory Note,” which is securitized and guaranteed with a Default Contract to cover 100% of the principal and interest payments for the life of the BCLOC Promissory Note. There are plans to have several avenues to sell the BCLOC Promissory Notes for funding.

2. Then in the shareholders letter of 27th August they referred to a 'potential funding source' that had mentioned certain changes to the notes would allow them to offer substantially in excess of $300 million in notes.

http://heritagecapitalcreditcorp.com/Share_Letter_PR_82707.pdf

5. Q: Is the institutional investor, stated in the press release on February 27,
2007, still providing the $300 million in funding for the purchase of
the BCLOC Notes?

A: A potential funding source has advised us that the special purpose entity (SPE) that issues the BCLOC Securities has made changes in the structure to reflect the current credit market conditions and expects to offer direct pay “AAA” rated notes versus collateralized debt obligations or CDOs. Further, they have advised that the restructuring is expected to allow the funding source to offer BCLOC Securities at a substantial amount over the $300 million previously mentioned in the press release.

3. Then in the WallSt.net interview of September 20th 2007, they mentioned that they have a new funding source (i.e. no longer a 'potential' funding source):

"We have a new funding source and funding for loans appears to be imminent."

4. And finally in the last PR of 19th October 2007, they mention the proposed merger with the conduit lender (i.e. funding source).

http://biz.yahoo.com/prnews/071018/lath129.html?.v=44

"Heritage will develop an action plan to merge with its conduit lender that will provide the capital infrastructure for launching new business and funding remaining BCLOCs in the pipeline."

All this signifies that progress in the relationship has been made over the last few months, that changes have been made to the BCLOC Promissory Notes to make them more attractive to institutional investors and this third party (i.e. conduit lender) having carried out DD on HCPC and their business model is now prepared to enter into a merger agreement with them.

If that is the case, it provides the best third party DD/ validation of HCPC and their business model that anyone could ask for imo. We should be hearing more about this funding source, who they are, the size and type of the organistaion, and the proposed merger in due course imo. Until the deal/ merger is finalised I think that info will be kept under wraps imo.

The funding source/ conduit lender may have provided financial backing to HCPC (i.e. prior to the merger) in exchange for shares to keep things on track imo. If so, when they merge they will have a vested interest to see the company progress. We may find out more info on this when the 3rd Quarter financial statement is published shortly imo.


GLTA






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