The Finova Group has today announced that it has signed an agreement to sell its commercial services business (which provides factoring and accounts receivable management services) to GMAC Commercial Credit.
Matt Breyne, president and CEO of Finova said “This decision was made with the realisation that factoring has become intensely price competitive throughout the industry over the last several years, requiring a critical mass significantly greater than Finova’s operations.”
It is expected that the transfer will occur in the third quarter of 2000.
The sell off has been prompted by Finova’s dwindling financial flexibility and waning credit profile. Although Finova’s short term liquidity position has improved in the last few months, the likelihood of their meeting approximately $1.6 billion in debt by May 2001 is impossible to assess. Finova suffered heavily from “problem receivables”, which amounted to $672.9 million for the year ended 30 June 2000....
