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Thursday, Mar 28, 2024
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Leap Wireless Refinances Debt With Cash Out to Fund Expansion

San Diego Leap Wireless International, Inc., a flat-rate wireless service carrier, is in the middle of a big expansion, and needs cash. Lots of it.

So, last week, the 1998 Qualcomm Inc. spinoff, which emerged from bankruptcy in August 2004, restructured $600 million in debt and obtained a $1.1 billion syndicated financing package.

Leap arranged a seven-year term loan of $900 million used to repay $593 million in debt plus interest, with the remainder, $295 million, to be used for working capital, acquisitions and build-out of its wireless networks. Leap’s main subsidiary, Cricket Communications, which operates its wireless networks, is moving into a variety of different mid-tier markets, including Cincinnati and Houston. It plans to enter San Diego by early 2007.

“It’s important for Leap to have a capital structure that provides good liquidity while balancing flexibility and cost,” said Dean Luvisa, Leap’s acting chief financial officer.

Besides the $900 million loan, Leap also arranged a $200 million line of credit that hadn’t been tapped as yet.

Interest on the new debt is LIBOR (London Interbank Overseas Rate) plus 2.75 percent, or 8.17 percent.

Leap said it can reduce the interest by a quarter of a point if its corporate debt is upgraded to B2 by Moody’s Investors Services. The firm’s current debt is rated B3, which is a grade below B2.

Banc of America Securities LLC and Goldman Sachs Credit Partners LP arranged the package funded by a variety of banks and institutional investors, said Jim Seines, head of investor relations.

The $1.1 billion syndication replaces Leap’s former credit package of a $600 million term loan, and $110 million credit line.

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Torrey Pines Expands, Increases Profits:

Torrey Pines Bank, a subsidiary of Western Alliance Bancorp of Las Vegas, has found its stride since its May 2003 opening.

For the first quarter, the five-office lender based in Carmel Valley reported net income of $1 million compared to $224,000 for the year-ago period in 2005.

Total assets grew 49 percent to $438 million year-to-year, and total loans increased from $190 million to $344 million.

The profits pushed Torrey Pines’ return on average assets to 1.03 percent, compared to 0.32 percent for the like period of 2005.

A return on average assets is its net profits divided by a bank’s average assets, and better than 1 percent is regarded as above average by the industry.

Last month, the bank opened its fifth office in Downtown’s Symphony Towers, complementing another office on C Street. It also has branches in Carmel Valley, La Jolla and La Mesa.

Torrey Pines parent, Western Alliance, is growing at an even faster rate. Total assets as of March 31 were $3.58 billion, up 53 percent from the prior year’s first quarter. Its loan portfolio grew 77 percent to $2.3 billion.

Other banks under the Western Alliance umbrella are BankWest of Nevada and Alliance Bank of Arizona. The company also operates two other units, Miller/ Russell & Associates, an investment brokerage, and Premier Trust, a trust division.

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Verimatrix Gets New Venture Funding:

Verimatrix, a San Diego-based firm that makes security software used by Internet TV networks, obtained $8 million in second-round venture funding led by Minneapolis-based Crescendo Ventures and included two first-round investors, Mission Ventures of San Diego, and Siemens Venture Capital, based in Munich, Germany.

Founded in 1999 and headquartered in Sorrento Valley, software maker Verimatrix has received $13 million in funding in helping to develop content security software for telecommunications providers in Europe, Asia and North America. The company recently announced it will sell software in India through Time Broadband Service.

Verimatrix now has 50 customers and 50 employees.

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Sunrise Hires Wealth Management Staffer:

More small banks are offering more services once provided only by the biggest lenders, including wealth management.

Sunrise Bank of San Diego announced this month that it has hired Julie Godfrey of Capitol Wealth Advisors to provide its customers with wealth management services such as investment strategies.

Godfrey formerly operated her own financial planning business, and she holds a variety of securities and insurance licenses. Capitol Bancorp, a bank holding company based in Lansing, Mich., is the 51 percent owner of Sunrise and two other banks in the county.

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Focus Buys Local Wealth Firm:

HoyleCohen, Inc., a San Diego-based wealth management firm with $360 million under management and 15 employees, was acquired this month by Focus Financial Partners LLC, a New York-based strategic and financial investor. Focus declined to disclose the price.

Focus, founded in January, also acquired a firm in Connecticut, Resnick Investment Advisors.

Focus Financial now manages $4.5 billion in assets, and ranks among the top 10 independent wealth management organizations in the nation, according to financial news provider Bloomberg.

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Regents Bank Opens New Office:

Regents Bank, based in La Jolla, recently opened its fourth office in Carlsbad at 1921 Palomar Oaks Way to help serve its North County clients better. The bank already operates offices in La Jolla, Downtown San Diego and Vancouver, Wash.

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New Mortgage Web Site Launched:

One Easy Fee Home Loans launched an online site this month, offering loans that combine closing, lender and third-party costs into a single, fixed-fee package, the company said.

The site offers home purchase, mortgage refinance, and equity loans.

The site is a spin-off of Cornerstone Mortgage, a privately held mortgage bank founded by Bill Mansy in 1994.

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Commercial Debt Rises To $2.7 Trillion:

The level of commercial/multifamily mortgage debt rose to $2.7 trillion by the end of the first quarter, up 2.9 percent from the end of the fourth quarter, according to the Mortgage Bankers Association.

Commercial banks hold the majority of the debt, nearly $1.2 trillion, or 43 percent, the MBA said.

The next largest holders of such debt are commercial mortgage backed securities pools that hold $577 billion or 21 percent of the total.

The remainder is held by life insurance companies; savings institutions; government sponsored enterprises and federally related mortgage pools.

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Small Change:

CSI Financial Services, a locally based lender to hospital patients, said its portfolio grew 23 percent in the first quarter compared to last year. The privately held firm said it has made more than $150 million in advance payments for hospital service and has loans in 49 states San Diego-based USA Federal Credit Union announced $10,500 in scholarships to seven students, who live in Japan, Italy and California Countrywide Bank, a subsidiary of home lender Countrywide Financial Corp., launched a new online savings account offering 5 percent interest.


Send any local finance news to Mike Allen via e-mail at

mallen @sdbj.com

. He can be reached at (858) 277-6359.

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